Why Have Renter's Insurance?
Valuable items need insurance. If you own a home, you have homeowner's coverage with contents coverage. If you rent, you need renter's insurance to cover the contents of your rental. Renter's insurance provides more than contents coverage, covering liability and additional living expenses as well. Renter's insurance does not cover your property owner or the property, but provides insurance just for you. The property owner should have separate insurance to cover the structure.
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Covered Loss
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If you cannot afford to lose your household items and everything you have in the rented home, you need renter's insurance. This insurance covers fire, windstorm, hail, smoke damage, theft, vandalism, falling objects and many other incidents that can occur when you rent. Rental insurance covers damage to your items from burst pipes, but not flood or earthquakes. One reason you may not need renter's insurance is if you are temporarily away from home and are a dependent college student. Your parents' homeowner's insurance policy often covers 10 percent of policy limits if you qualify.
Take Inventory
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If you have renter's insurance, an inventory is important for a loss. A video of each room is helpful, but a listing of items with serial numbers, identifying characteristics and photos is more accurate. Start a file with receipts for major purchases. You can use these records for proof of loss so long as you own the items, whether you rent or own the structure. Renter's insurance pays either actual cash value or replacement value. Replacement value is better insurance, as it covers replacement of your items. Actual cash value allows for depreciation.
Additional Living Expenses
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In addition to paying for the loss of your items in the event of a covered loss, renter's insurance pays living expenses if you have to move out of your rental unit as a result of the incident. This cost may be substantial, and you can find rental insurance at a reasonable price.
Liability Insurance Coverage
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If you have a worker or a friend who sustains an injury on the rental premises, you may need liability coverage in case of a claim or lawsuit. Renter's insurance includes liability insurance that covers the claim and your legal defense.
Considerations
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Renter's insurance comes with a deductible, or a certain dollar amount you pay before the insurer pays. A policy with a high deductible will have lower premiums. The coverage limit will also affect the price of the renter's insurance policy. If you get $25,000 in insurance, $25,000 is the maximum amount the insurer will pay under any circumstances. Use the inventory you create to determine the amount of insurance coverage you need. You may choose an all risk policy or a named perils policy. All risk policies cover more incidents than named perils policies. If you have fine jewelry or expensive electronic equipment, these items have restrictive limits in the policy terms. Request an endorsement or rider for additional coverage on these items to insure them.
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