Learn how renters insurance works and what scenarios it covers before obtaining coverage.
If you rent your home, renters insurance may be needed. While your landlord’s insurance covers the structure, it does not cover your belongings or liability. Renters’ insurance may be able to shield you from huge unexpected expenditures.
Fortunately, renters insurance is inexpensive. Many renters may be able to obtain coverage for less than $20 per month.
Here’s what you should know about renters insurance before you get it.
What is the purpose of renter’s insurance?
Renters’ insurance may help you in three ways: it can repair or replace your belongings if they are destroyed, it can pay for living expenses if you are relocated, and it can cover harm to others.
The most well-known aspect of renters insurance is its ability to assist you in restoring or replacing your belongings if they are damaged due to a covered event, such as a fire or theft. This includes your furniture, clothing, electronics, and other possessions. These expenses may quickly add up, and renters insurance can assist in guaranteeing that you can afford replacements if something happens in your home.
Renters insurance can also help you pay for extra living expenses (ALE) if your leased home becomes uninhabitable for any of the reasons listed above. Your renter’s insurance coverage may cover hotel expenditures, meal expenses, and even long-term rentals.
Finally, renters insurance can protect you from liability for bodily harm or property damage to others. For instance, if a friend comes over and accidentally injures themselves in your apartment and sues you, your renter’s insurance coverage may help cover your legal fees.
What does renters insurance cover (and what doesn’t)?
Renter’s insurance might come in handy in a variety of situations. It is frequently used in the following contexts:
Fire and smoke
Theft
Vandalism
Explosion
Windstorm
The following are some notable exceptions to the general rule that renters insurance does not apply:
Flooding
Earthquakes
If you are concerned about these events, you may purchase coverage for them separately – the National Flood Insurance Program offers flood insurance to renters, and select residential insurers to provide earthquake insurance to renters.
As with any insurance policy, the coverage provided by a given policy may differ depending on the insurer. Read the documentation that comes with your insurance to learn more about what is and isn’t covered.
When paired with vehicle insurance, renters insurance is less expensive.
If you own a car, you almost certainly need auto insurance. So why not take advantage of it? Insurance companies typically provide discounts for bundling the two plans.
Get quotes from many insurers for your vehicle and renters insurance, making sure the coverage limits and deductibles (or the amount you’ll be responsible for if you need to use your policy) are the same. Then, without sacrificing coverage, you may compare rates or pricing to get the best bargain.
Some of our top picks for the best auto insurance companies are also among the best renters insurance companies. Because of its vast renter’s insurance policy coverage and comprehensive automobile insurance coverage throughout 46 states, Nationwide is a popular choice for both.
Progressive also offers car insurance in all 50 states, as well as convenient features like online quotes and an accident forgiveness program, its renter’s insurance was one of our top picks due to its extensive discounts, including those for bundling and getting a quote three days or more before your current policy expires.
USAA offers comprehensive coverage and a 10% discount for bundling renters and auto insurance for persons in the military or with a military affiliation. Unlike many other renters insurance companies, USAA includes flooding coverage in its policy.
Policies estimate the value of your belongings in one of two ways.
Before looking for renters insurance, you should be aware of the two options for replacing lost items. When looking for insurance, look for two types: real cash value and replacement cost.
Actual cash value coverage (ACV): Policies that use the ACV of your products include a deduction for depreciation or value loss over time.
Replacement cost coverage: Replacement cost coverage pays the monetary amount necessary to replace an item today, whether it is more or less than it was when you bought it.
These two techniques determine your pay in quite different ways. For example, depending on the type of renters insurance coverage chosen, a $1,000 television purchased three years ago with a 10-year lifespan might be compensated in the following ways:
Actual monetary value: Replacing a $1,000 television purchased three years ago now costs $1,300. The ACV would be equal to the replacement cost ($1,300) multiplied by the remaining life (70%), for a total of $910.
The $1,300 cost of replacing the old item with an identical one would be covered by the replacement cost.
While replacement cost coverage is more expensive, it may provide much more coverage.