Do I Need Renter's Insurance?
The owner of the apartment, condo or house you rent most likely has insurance that protects the physical building. However, the owner's insurance does not cover your personal property and it does not cover you against your own liability. It is not uncommon for the landlord to write into the rental agreement or lease that you, the renter, are required to obtain renter's insurance. Even if the landlord does not require it, having renter's insurance is prudent.
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Liability
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If an accident occurs at your rented home, you are at risk of liability if a guest or visitor is injured or if their property is damaged. As an example, if you have a dog that bites a visitor or guest, the risk of financial liability is in all likelihood yours. Renter's insurance can provide you with coverage against liability.
Loss of Use
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If a fire or destructive storm occurs, your rented home could be damaged so badly that you can no longer reside in it. You would then need temporary lodging and to perhaps eat meals away from home. Renter's insurance loss of use coverage would likely cover your additional living expenses above your standard monthly expenses. This coverage is typically limited to certain events and is limited in duration and amount,. What it can do is help offset the cost of a place to stay and meals to eat when you cannot inhabit your home.
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Personal Property
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A "peril" is a condition or event such as fire, theft or windstorm that can cause a loss. If you are a renter, renter's insurance can provide coverage for your personal property. Your landlord's insurance is not likely to cover your belongings, only his. If you have expensive sports equipment, jewelry or electronics, you may need to add what is known as a rider, a special add-on to your renter's policy. To avoid disputes with your insurer, make sure you take a written, photographed and/or video inventory of items in your home before you purchase insurance. Keep this record in a location away from the home.
Property Valuation Methods
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Renter's insurance terms for property valuation are important if you experience a loss. Make sure to fully understand them when you initially purchase insurance. One valuation method is called actual cash value. This coverage pays the cost to replace minus an amount for depreciation. It assumes the items you own have less value as time goes by. Another valuation method is known as replacement cost. This type of coverage usually costs more. It pays for the replacement value of the item of personal property without any deduction for depreciation. A third type of valuation method is known as agreed up value. This coverage is likely to cost more. You and the insurer agree that an item of yours, usually something that is of one-of-a-kind high value, or an antique, or a custom creation, will be insured at a specific value.
Potential Discounts
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Often, insurance discounts are available to renters. Some discounts may be available from insurers to tenants who have certain features in their rented homes. These may include an installed alarm system, sprinkler systems, smoke detectors, fire extinguishers, deadbolts and certain window locks. If the renter has more than one policy with an insurance company, such as auto insurance, the company might also offer a discount on renter's insurance.
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References
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