If you think you don’t need an insurance policy because you are renting, rather than owning a home, think again. When you rent an apartment or home, you are living in someone else’s property.
And there’s a good chance you didn’t read your lease agreement all the way through. There’s a very good chance that the lease says you are responsible for any damage that you cause to the property, intentionally or unintentionally.
And if something does happen, you can bet that your landlord is going to come knocking. So you’d better know about the different types of renters insurance so that you can have the right policy in place.
Otherwise, if something happens, not only could you be evicted, but you could be required to pay, and may have trouble obtaining a new lease in the future.
Ready to learn about the renter’s insurance industry, so that you can pick the best renters insurance policy for your situation? Keep reading to find out more now.
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Understanding the Different Types of Renters Insurance Coverages
Renters insurance policies are generally the same, regardless of if you are renting a home, an apartment, a condo, or something in between. What differs is the specific coverages contained in your policy.
So your renter’s insurance policy is really a bundle of different products. While you generally get all of them in your policy, the limits you set on each category are up to you. Here are the different categories to be aware of.
Liability Coverage
One of the most important components of your renter’s insurance policy is liability coverage. In fact, many landlords in the rental real estate market require tenants to have this policy in place.
If something that you do damages the property you are living in, the liability coverage will take care of those expenses. Or if you throw a wild party at your apartment, and someone breaks all the windows, you might be covered.
Liability coverage also protects you if you, or the contents of your rented facility, harm someone else. If someone comes into your apartment and hurts themselves, by slipping or some other accident, this policy can cover you.
Or if your air window AC unit falls out of your window and smashes someone else’s car, this policy would cover you as well.
Personal Property Coverage
Another important aspect of your renter’s insurance policy is personal property coverage. You’re filling your apartment with all of your personal belongings, right? There’s a good chance that you have thousands, if not tens of thousands of dollars worth of stuff.
It would suck if all of that was stolen, right? Or what if there was a fire and all of it got destroyed?
Without a renters insurance policy in place, you’d be out of luck. But thanks to the personal property coverage, you’ll be reimbursed, up to your limit.
If your limit on personal property is $10,000, and you lose everything in a fire, then you’ll get a $10,000 check from your insurance provider. That’s great news if you have less than $10,000 worth of stuff. But if the value of your belongings is a lot more, then you’re going to want to set a higher limit on this portion of your policy.
This policy also only covers the belongings of those listed on your policy. If you have another friend move into your apartment, but they aren’t on the policy, then their stuff isn’t covered.
This part of your insurance policy will cover you in the event of everything ranging from fires and riots to theft, vandalism, and even an airplane crash.
Loss-of-Use Coverage
There are many instances where homes and apartments become uninhabitable due to natural causes. This might be due to a flood that has caused damage to the property.
Or it could be due to an evacuation from fires or volcanoes. If the cause of the damage is covered by your policy, then your policy will pay for your expenses to temporarily relocate.
Usually, this means staying in a nearby hotel until your home is repaired and becomes inhabitable once more. You’ll also get reimbursed for other expenses, too.
Since you no longer have a kitchen, because you are staying at a hotel, then you’ll probably need to eat out at restaurants a lot. Your policy should cover these costs in full, but you’ll need to save your receipts.
Many people find this situation enjoyable for a period of time, but it does become a drag if your home renovations take months to complete. While you usually can’t choose the most luxurious accommodations, try choosing a place with helpful amenities like a pool, a gym, a playground, and free WiFi to say the least.
Policy Types
When you purchase a renters insurance policy, you’ll have a few choices other than setting your limits.
For starters, you can set a deductible. This is the amount you’ll have to pay out of pocket before your insurance policy kicks in and starts reimbursing you.
The higher the deductible (meaning the more you have to pay out of pocket), the lower your monthly premiums will be. The lower your deductible, the more you’ll pay each month for your policy.
You also get to choose if you want an all-risk policy or a named-risk policy. All-risk policies cover almost any possible circumstance unless it’s specifically excluded from a particular policy. This is the safest bet, but more expensive.
Named-risk policies only cover specific circumstances as outlined in the policy.
Lastly, you can choose between a replacement cost policy or an actual cash value policy. With a replacement cost policy, you’ll get reimbursed for your belongings as if you were buying them brand new. This means you’ll get more money.
But it also means you’ll pay more in premiums.
With a cash value policy, you’ll get reimbursed for your items according to their cash value at the current time. So if you lost your computer to a fire, and it’s five years old, you might only get $400 as a reimbursement, even though you paid $1,200 five years ago, since it’s not worth as much today.
Be a Smart Renter
As you can see, there are different types of renters insurance that covers a lot of different things. Getting a policy is the safest thing to do if renting an apartment or home. Be a smart renter and get an appropriate policy. They are very affordable anyway, so you’ve got nothing to lose, and everything to gain if something goes wrong.
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