Whether you are saving for your first home or plan on being a lifelong tenant, renter’s insurance is bigger in Texas. According to the Insurance Information Institute, Texas tenants paid the sixth-highest renter’s insurance premiums in the country in 2008, or $216 per rental and $40 more than the national average. In the same year, Texans also paid the highest homeowner’s insurance rates at a whopping $1,460 per year, which is nearly double the national average.
Texas law cannot force you to insure your apartment or rental property with renter’s insurance, but some landlords will require minimum coverage as part of your lease agreement. Landlords often mandate this type of supplemental coverage because their property insurance only covers the physical dwelling, but not your personal possessions inside. If you live in an area with high crime or a strong likelihood of natural disaster, renter’s insurance will repair or replace your possessions, cover you if a person is injured in your home, and will even put you up in temporary housing if your rental is destroyed or deemed unstable.
Named Peril Versus All Risk
In Texas, renter’s insurance is available in two types of coverage: named peril and all risk protection. As its title suggests, named peril only protects your rented property from certain types of disaster, such as fire, windstorm or theft. A named peril policy does not cover unexpected catastrophes, and therefore this type of coverage is generally more affordable. In the opposite vein, an all-risk policy is more expensive but covers just about everything that can physically damage your possessions. However, exclusions do apply even on an all-risk plan, so it is important to read your policy carefully.
If you're renting an apartment as a college student or temporarily living away from home, your parent or guardian's Texas homeowner’s insurance may make renter’s insurance unnecessary. Most homeowner’s insurance policies cover a dependent's possessions when he is living away from home, including up to 10 percent of the policy's personal possession coverage limit, and 100 percent of the liability limit. In other words, if a person suffers an injury in your apartment and your parents have liability homeowner’s insurance, any litigation or medical costs are covered. Similarly, if your parents’ policy covers $50,000 worth of personal possession replacement, you receive coverage for up to $5,000.
Like any other insurance plan, renter’s insurance can be daunting and overwhelming for beginners. To help consumers choose the right coverage option, the Texas Department of Insurance and the Office of Public Insurance Counsel created the Help Insure website, which offers comparison tools and a listing of all Texas-certified insurers. For a link to the Help Insure website and the Texas Home Inventory Checklist, which can help you determine and document the worth of your possessions, see Resources.