What is Renters insurance? Renter insurance is a type of homeowners insurance that renters should purchase to protect their personal property and liability in the event of an incident such as theft, vandalism, fire, etc.
You may not think renters insurance is necessary, but it can provide protection for your personal belongings in the event of theft or damage.
We’re here to break down its policies and help you figure out which policy is right for your needs.
What is Renters Insurance?
Tenants renters insurance (also known as renters protection insurance) is a type of property insurance that covers your personal belongings in the event of theft or damage.
It’s usually sold by an agent, who may work for an insurance company or be self-employed.
As with other kinds of homeowners coverage, renters’ policies are issued on your renter’s binder.
Renters Insurance Policy
Your renter’s policy will include specifics about what your plan covers and what it doesn’t cover.
The basic components of a renters policy are condition, replacement cost, cash value, covered perils, exclusions and endorsements.
Here’s what each part means to you:
The condition section should list all the different kinds of damage your renter’s insurance plan covers, like fire or theft.
A typical renters policy will cover losses resulting from 10 specific perils: fire; lightning; windstorm; hail; explosion; riot or civil commotion; aircraft or vehicles (including aerial devices, falling objects, missiles, and cratering caused by meteors); smoke; vandalism or malicious mischief; theft (and attempted theft with forced entry); volcanic eruption.
2. Replacement cost:
This part of renters coverage determines how much it will cost to repair or replace your belongings, minus any applicable deductibles.
Your renter’s coverage pays the actual cash value for items at the time they are damaged or stolen–not what you paid for them originally.
3. Cash value:
Cash value coverage is the renters insurance term for how much you are paid for an item when it’s damaged or stolen.
The cash value is usually much less than your renter’s coverage limits because thieves take good care of their goods.
4. Covered perils:
Your renter’s plan will have a list of all the specific situations that are covered in case of damage to your personal possessions, like theft by fire or vandalism by windstorm.
There may be other things not specifically listed for coverage–for example, flood damage wouldn’t be included under most policies, since renters don’t get flood insurance (it’s covered under homeowners).
Some renter’s plans might offer reduced coverage if you live in high-crime areas; check with your agent about this before purchasing insurance.
Exclusions refer to specific situations that your renter’s plan won’t cover.
Exclusions from renters’ plans could include damage from earthquakes or floods, war or nuclear accidents, intentional acts or losses that are “expected.”
Anything you add to your renter’s policy other than the original policy can be considered an endorsement.
The endorsements section of renters coverage will list any additional types of protection you’ve purchased for your renter’s plan; common endorsements include:
-Guests and their possessions (additional renters coverage)
Flood Insurance (an optional endorsement for renters who live in low-lying areas)
-Replacement cost value for contents (increases renters coverage limits for personal belongings)
-Sewer backup (coverage for damage caused by sewer back-up).
How Does It Works
As with other types of insurance, renters protection renters policy will generally fall into three sections: your possessions, living expenses and liability.
Your renter’s plan will help you recover if your personal property is damaged or stolen. If you live in a flood zone it may also reimburse you if the contents of your home are destroyed due to flood water entering your house.
You can use its funds to repair damage at your own convenience—and don’t have to wait until the repairs are made on your renters residence if that takes longer than six months.
With some policies, it’s possible pay extra coverage limits to increase the renters coverage limits for personal belongings.
Your renter’s policy protection plan will also likely include liability coverage if someone is harmed while on your property or takes legal action against you because of something that happened on your renters.
If someone is injured at your renters residence, their medical bills are covered under liability coverage. A typical policy will cover up to $100,000 in damages related to bodily injury or death caused by accidents within the residence.
Some policies provide you with additional liability coverage for losses caused by pet-related or intentional acts of an insured tenant living in the premises of the rented dwelling.
To make sure you get all of these things–and avoid any loopholes–it’s important that you review renters insurance policy carefully to make sure you get the right protection.
How It Works For Renters
-Purchasing renters coverage is similar to buying homeowners insurance.
Renters’ plan quotes are a little less complicated since there’s no home to inspect or claim history to review.
If you’re a renter looking for the best rates, start with a quote comparison online — it won’t cost anything and will help give you an idea of what type of plan is available in your area as well as how much coverage each one provides.