Though not required by all property management companies or private landlords, renter’s insurance is a smart and affordable investment that all renters should have.
Renter’s insurance is a policy that covers personal property in case its damaged, destroyed or stolen. For example, in the unfortunate event of a fire or burglary, renter’s insurance will cover the loss of damaged or stolen property like electronics, furniture and clothing.
Depending on your policy, renter’s insurance may also cover additional living expenses in the case your rented house or apartment is temporarily uninhabitable. Add personal liability coverage to your policy, and you will be protected in instances that you’re held responsible for damaging other people’s property or incidents that may happen to others in your home. Say if your cat claws up a friend’s prized leather handbag, or a guest injures themselves in your home and holds you liable.
Now that you know the basics of renter’s insurance and personal liability coverage, check out the answers to five frequently asked questions about renter’s insurance.
1. What does renter’s insurance cover?
While there are several types of renter’s insurance policies, most policies will cover the damage or loss of property caused by:
- Fire or smoke
- Damage caused by vehicles
- Wind, hail or lightning storms
- Falling objects
- Damage from plumbing, heating or air conditioning systems (freezing, cracking, water eruption, etc.)
Renter’s insurance usually does not cover damage from:
- Earth movement
- Intentional destruction of property
- Government seizure
2. What’s the difference between replacement value and actual value?
Replacement cost value is coverage that considers the full replacement cost of your item. For example, if you lost your couch in a fire and purchased it five years prior for $3,000, the replacement cost value of your couch is $3,000, and you’ll receive the full replacement amount from your insurance provider, minus your deductible.
Actual cash value is coverage that pays for an item’s cost after depreciation. For example, if you purchased a laptop for $700 three years ago and it was stolen, the claim settlement with actual cash value coverage would likely determine that given its age, the laptop is now worth less. You would be reimbursed the $400 current value of the laptop, minus your deductible.
3. If I’m robbed or my stuff is destroyed in a fire, how do I prove what items were in my home that need to be replaced?
It’s good practice to keep an inventory of your important belongings in case of an emergency. Photograph and catalog your personal belongings and upload them to a cloud storage platform for online backup that can be accessed anywhere.
4. Can I purchase additional coverage for my most expensive valuables?
Yes, additional insurance can be purchased for high value items, such as engagement rings, cameras, musical instruments and recording equipment, art, etc. Depending on your coverage, you may also be protected in case those valuable items are lost or misplaced.
5. Does renter’s insurance cover belongings outside of the home?
Yes, some renter’s insurance policies protect your belongings outside of your home. For example, if your bicycle is stolen from a bike rack or your purse stole from your car, your policy may cover you in these circumstances.
This content is for informational purposes only. Consult your actual insurance policy for details regarding terms, conditions, coverage, and exclusions.