Did you fall in love with an apartment and can’t wait to sign the lease? Renting an apartment has a lot of perks. For example, you won’t have to worry about repairing the roof with your own hard-earned cash or fixing major plumbing issues. However, even though your soon-to-be landlord owns the building and will take care of the big stuff, you’ll still be responsible for your personal belongings. For this reason, you may be required to purchase renters insurance before move-in day. Even if your new apartment doesn’t require renters insurance, it’s seriously worth considering.
If you’ve never had renters insurance before, you’re probably wondering if it’s necessary. Renters insurance is something every tenant should have because it’s inexpensive and worth the protection and peace of mind. In this post, we’ll show you why you need renters insurance and what you can expect as a covered tenant.
What Is Renters Insurance?
Simply said, renters insurance protects you and your belongings. Even though your landlord has insurance for the building, their insurance does not cover your personal belongings. Renters insurance is an excellent way to protect yourself financially in case something unexpected happens.
For example, imagine you come home from work and discover someone’s broken into your apartment. The burglar stole your laptop, diamond earrings and a designer purse for a total loss of $2,000. Now, imagine you have renters insurance with a $500 deductible. After you pay the deductible, your insurance company will cover the rest so you can replace the stolen items. On the other hand, if you don’t have renters insurance, you’ll be completely out of luck.
1. What’s Covered
Generally, renters insurance covers your belongings up to a limit. Your insurance agent can help you decide the best type of coverage for your needs. A standard renters insurance policy includes the following types of protection.
Renters insurance covers belongings that are damaged or lost due to:
- Other hazards listed in the policy
Renters insurance does not cover belongings affected by:
- Car damage
If you’re concerned about floods, earthquakes or other disasters, you can buy supplemental insurance for greater coverage. Also, it’s worth noting that not all of your belongings will have equal coverage with a standard policy, and some items may have special limits. For example, a renters insurance policy may only cover up to $1,000 worth of jewelry. If you have jewelry that’s worth more than $1,000, you can purchase additional coverage to protect you from theft or damage.
Renters insurance protects you against lawsuits for bodily injury or property damage you, a family member or a pet cause to other people. Your policy will pay for the cost of defending you in court and for court awards up to the limit in your policy. So, if your puppy has an accident on a neighbor’s new white couch, for example, you should be covered. Generally, liability limits begin at around $100,000. However, liability doesn’t cover damage you or your pet causes to your own belongings.
Additional Living Expenses
Additional Living Expenses coverage (ALE) covers the cost of living elsewhere if your home is destroyed. For example, if a fire destroys your apartment building, ALE will generally pay for your hotel room and restaurant meals while your apartment building is being repaired. Basically, it covers costs you normally wouldn’t have while living at home.
No-Fault Medical Coverage
No-Fault Medical coverage protects you if a person is injured inside your home. Usually, a renters insurance policy will provide $1,000 to $5,000 of this type of coverage. No-Fault Medical coverage might come in handy if a friend accidentally trips over a chair and injures an arm, for example, or cuts him or herself with a kitchen utensil. In either situation, you would submit their medical bills right to your insurance company. This type of coverage doesn’t cover an injury for you or a pet in your home.
2. The Two Types of Renters Insurance
When it’s time to sign up for renters insurance, you’ll want to consider which type to get. You can choose from the following two types of renters insurance:
- Actual cash value: An actual cash value policy covers the current value of items. For example, if a burglar steals a TV that you bought ten years ago, your insurance company will pay the current value of the TV – not what you paid for it a decade ago. Your insurance company will also take wear and tear into account and subtract that from the value of the damaged or stolen items. This type of policy typically features a less expensive premium, but may not be right for you depending on what you own.
- Replacement cost value: A replacement cost value policy will pay the cost of replacing your possessions with similarly valued items, without any deduction for depreciation. For example, if you lose an old couch in a fire, this policy will cover the cost of a new couch to replace the old one. According to the Insurance Information Institute (I.I.I.), this type of coverage costs about 10 percent more than an actual cash value policy but may be well worth it.
3. The Benefits of Renters Insurance
Renters insurance offers several benefits, yet only 37% of renters have insurance. On the other hand, 95% of homeowners have a homeowners insurance policy, which is very similar to renters insurance.
Why don’t more renters have insurance? People may not know renters insurance exists, or they might think they’re covered under their landlord’s policy. Some may believe they don’t own anything valuable, so it’s not worth having. Even if you don’t own a lot of electronics or other valuables, purchasing renters insurance is still a smart choice. Here’s why:
- It’s affordable: According to the I.I.I., renters insurance costs $187 a year on average, or less than $4 per week. That means, for the cost of a small coffee and a donut, you can potentially save thousands of dollars in the event of a disaster. Also, if you add renters insurance to your car insurance policy, you can usually get a discount. Bundling insurance can reduce monthly insurance costs by 5 to 10%.
- It covers your belongings when you travel: Most policies include off-premise coverage. This means your belongings are protected when you’re away from home from the same disasters listed in the policy. For example, if you’re on vacation and someone steals belongings from your hotel room, you’ll be covered.
- It could save you thousands of dollars: Renters insurance helps protect your financial future and can save you a lot of money if disaster strikes. Some incidents, like a fire or injury, can be financially devastating without insurance. For example, imagine you have a pet dog, and they bite your neighbor. The average cost for dog bite claims was $39,017 in 2018. Renters insurance typically have liability limits between $100,000 and $300,000.
- It provides peace of mind: If you’re moving into a new city or neighborhood with higher-than-average crime rates, renters insurance can provide protection and peace of mind while you’re at work or sleeping. Although no one wants to be a victim of theft or burglary, renters insurance can help you recover from such an event, and you’ll rest assured knowing you have that coverage.
How Much Renters Insurance Do I Need?
Not every renter needs the most expensive insurance policy. Likewise, some renters may underestimate the value of their belongings. To determine how much insurance to buy, you’ll need to take the following steps.
1. Find out the Lease Requirements
The first step is to find out how much you need depending on the lease requirements. Your prospective landlord should state the minimum insurance requirements upfront. Many landlords require a minimum of $100,000 in liability coverage. If your landlord doesn’t specify an amount, talk with your insurance company and ask what they recommend.
2. Determine the Value of Your Belongings
Next, decide how much coverage you want for your possessions. This part of the process will take a little effort, but you’ll be glad you took the time to consider all of your belongings. You’ll need to determine the value of everything you own and care about, including furniture, clothing, electronics, appliances, jewelry and even smaller items like utensils and towels.
First, take pictures or video of your belongings. Next, make a detailed list of every item. Don’t forget to include any items you have in storage. Add the actual or estimated value next to each item on the list, and keep it up to date.
You might use a home inventory tool to help you stay organized and keep a record of your belongings. Some companies let you upload your inventory directly to their website. No matter what, make sure to store this information somewhere safe. You might store a copy in the cloud or a safe deposit box. If you need to use renters insurance, a home inventory will make it much easier and faster to file a claim.
3. Know What’s Covered
You’ll also want to carefully consider what your insurance company covers, and if it’s enough for you. According to United Policyholders, a basic policy provides $10,000 in personal property coverage, $100,000 in liability coverage and $1,000 in medical coverage per person for each accident. You may want to add extra coverage to the policy depending on what you own and if you have pets or not.
Typically, insurance companies cover belongings up to a set limit. For example, your policy may cover up to $2,000 for electronics and $1,000 for jewelry. Most policies limit coverage for jewelry, art and collectibles. If you own more than $1,000 worth of these items, you’ll need to purchase additional coverage. These extras may only add a few extra dollars a month to your policy.
It’s important not to choose the lowest limit possible. Many renters underestimate the value of their belongings. You might think you only own a few thousand dollars worth of belongings, but it’s likely you have much more. Someone renting a two-bedroom apartment may easily have $20,000 worth of belongings. It’s recommended to choose a policy that will cover at least this amount for personal possessions.
Lastly, don’t forget about deductibles. Try to choose the highest deductible you can afford, or at least $500. If you can afford a $1,000 deductible, you’ll pay a lower premium.
Does Renters Insurance Cover Other People’s Belongings?
Policies differ between insurance companies, but usually, a person who lives with you is not automatically covered under your plan unless you add them to the plan. It’s always best to read through your policy to know who is and who isn’t covered.
If you’re wondering whether or not you should add your roommate to your policy, it’s highly recommended that they have their own plan. Otherwise, your roommate’s insurance claims will go on your record, which may affect your rates. Also, you would both have to decide how to split the claim money after a disaster. It can be tough to come up with a shared plan if one person has more valuables than the other.
Lastly, if the roommate moves out, you might get stuck with the insurance bill. Even though it can save money to split a renters insurance policy, it’s likely not worth it in the long run.
How Much Is Renters Insurance per Month for an Apartment?
According to the Pennsylvania Insurance Department, most renters insurance policies range from $15 to $30 a month. Bundling it with other policies can make it even more affordable.
Do I Really Need Renters Insurance?
If you’re still wondering if you should purchase renters insurance, know that it’s always a good idea to have this type of coverage, whether or not your landlord requires renters insurance. In 2017, there were more than 1.4 million burglaries in the United States. Crime can happen anywhere, and so can fires, storms, accidents and other disasters. Renters insurance provides protection when the least expected happens, and you’ll be glad to have that cushion if you ever need to use it.
Find an Apartment You Love With Triple Crown
At Triple Crown Corporation, we require all tenants to have renters insurance. We believe renters insurance is critical for enjoying peace of mind in your new home and protecting yourself financially for life’s surprises. We want our tenants to enjoy comfortable, secure and peaceful living in our beautiful communities, and renters insurance is part of the package.