Renters Insurance FAQ
Renting an apartment or home and wondering if you should purchase a renter’s insurance policy? Read through our renter’s insurance FAQ, and decide for yourself:
What is Renter’s Insurance?
Just as the name suggests, renter’s insurance is a type of insurance that protects renters. The policy pays to replace your belongings if they are damaged, destroyed or stolen under certain conditions.
Why Do I Need Renter’s Insurance?
The simple answer: because stuff happens. Fires break out, things get stolen and plumbing fails. With a renter’s insurance policy in place, you don’t have to worry about how you would handle the fall out from such events because you know that you’re covered.
What Does Renter’s Insurance Cover?
Renter’s insurance typically covers loss or damaged caused by:
- Fire
- Smoke
- Theft
- Vandalism
- Windstorm
- Hail
- Lightning
- Explosion
- Certain Types of Water Damage (caused by plumbing failures, appliance failures, etc.)
Most renter’s insurance policies also include liability coverage, which will protect you if someone is injured while at your home or if you do something that causes damage to another person’s property.
Do I Need Renter’s Insurance If My Landlord has Insurance?
Yes. Your landlord’s insurance policy will only cover damage to his building. It won’t pay for the replacement of your belongings and it won’t cover your relocations costs, should you need to move out while repairs are made.
I Don’t have Many Valuables, Do I Still Need Renter’s Insurance?
Yes. While you may not own many valuables, you probably still own quite a bit of stuff. Take a look around your home and imagine how much it would cost to replace everything you have. Could you afford to do that? If not, you need renter’s insurance.
Still not convinced that you own anything worth insuring? See how many of these pricey items you own:
- A computer
- A television
- A DVD player
- A stereo
- An iPod
- A digital camera
- Jewelry
- A bike
How Much Renter’s Insurance Do I Need?
The size of your renter’s insurance policy should be based on the value of your belongings. If you’re just starting out and only have the bare essentials, you don’t need a lot of coverage (a $10,000 policy should do it). If, however, you have a house full of expensive electronics, a bigger policy makes perfect sense. Consult an insurance agent for help in determining how much insurance you need.
Other things to keep in mind:
- Most renter’s insurance policies do not include flood or earthquake insurance. If you live in an area that is prone to such activity, you may want tack on additional coverage
- If you own jewelry, antiques or other objects of extreme value, you may need to add a separate rider to your policy to have them covered for their full replacement cost
- Many insurance companies charge higher premiums (or require additional coverage) if you own a large dog.
How Much Does Renter’s Insurance Cost?
According to the National Association of Insurance Commissioners, the average renter’s insurance policy costs between $15-30 a month. (with "National Association of Insurance Commissioners linked to http://www.naic.org/documents/consumer_alert_renters_0812.htm)
How Does Renter’s Insurance Pay Out Claims?
If you have actual cash value (ACV) coverage, your insurance company will pay the cost to replace your stolen/damaged/destroyed items, minus their depreciated value. If you have replacement cost coverage, your insurance company will reimburse you for the full replacement cost of the items. Expect to pay more for replacement cost coverage.
How Can I Save on Renter’s Insurance?
You can often get a discount on your renter’s insurance if the property you’re renting has certain safety features in place, this includes: a monitored burglar alarm, smoke detectors, fire extinguishers, a sprinkler system and dead-bolts on all exterior doors.
You may also be eligible for a multi-line discount if you have your auto insurance through the same company. Often this discount is enough to completely cover the cost of your renter’s insurance policy.
Want to save even more? Then, consider going with a higher deductible, and ask about paying your annual premium in one lump sum. You’ll usually pay more to have your premium broken up into monthly payments.
Steve Wyrostek – RentersInsurance.org Expert A 20 year plus veteran of the insurance industry, Steve managed departments in the personal and commercial lines areas of major insurers. He’s familiar with how insurance—ranging from boat to workers compensation—works.
