Renters insurance is a wise choice for anyone renting a condo, apartment, house, or room. This is because things happen and your stuff is valuable. Renters insurance can give you coverage not only to protect your things but also to provide you with temporary relocation in the aftermath of a disaster.
While some landlords may need you to have a certain level of coverage, it’s beneficial to have it even if it’s not mandatory. This insurance protects your belongings against theft, destruction, or damage from covered events.
Why do You Need Renters Insurance?
Some renters make the mistake that their personal belongings are covered under their landlord’s insurance. But the reality is that no one can buy insurance on something they don’t own. Because a landlord does not own your items, all they can do is have homeowners insurance. They can’t cover your personal belongings.
With so many types of coverage and many insurance companies, you need to make sure that you have the right coverage for your belongings. In Houston, it’s important to have water damage and flood coverage to cover losses from hurricanes.
Personal Property Coverage
Renters’ insurance policies protect your belongings. This coverage ensures you’re reimbursed if your items are damaged, stolen, or destroyed by a covered event. Even if something like your laptop is stolen from your car, your renter’s insurance will cover it.
Basic covered perils include:
- Fire and lightning
- Windstorm and hail
- Explosions
- Riots
- Aircraft damage
- Damage by vehicles (not your own)
- Smoke damage
- Vandalism
- Theft
- Volcanic eruption
- Falling objects
- Weight of snow, ice, or sleet
- Damage from heating systems
- Water or steam leakage
- Freezing of plumbing or HVAC systems
- Electrical short-circuits
What Types of Personal Property Are Covered?
Renters insurance covers many personal items, but not all are covered equally. There may be sublimits for certain categories. Typically, everyday items like furniture, clothes, cookware, and home goods are covered.
However, expensive items such as electronics, jewelry, or fine art are only covered up to your policy’s limit. This limit is the maximum amount your policy will pay for a loss. For example, if a fire causes $50,000 in damages but your limit is $30,000, you’ll only be reimbursed $30,000.
Roommates’ belongings aren’t covered unless they’re added to your policy, which will increase your premiums.
How Much Personal Property Coverage Do You Need?
Depending on your home inventory, you may need more or less insurance than you think. When purchasing a policy, you can choose the amount of personal property coverage you need. To determine this, take an inventory of your belongings, including:
- Photos or videos of items (useful for claims)
- Receipts or statements proving purchase and price
- Estimated item value
- Estimated year of purchase
By estimating the total value of your belongings, you can decide how much coverage you need to ensure reimbursement if anything happens.
Deductible for Personal Property Coverage
Your deductible is the amount you pay before insurance coverage starts. For instance, if your upstairs neighbor’s bathtub damages your $3,000 couch and your deductible is $500, you pay the $500 first, then the insurance covers the rest.
When signing up for renters insurance, you can choose your deductible. A higher deductible means lower premiums.
Additional Coverage for Personal Property
Renters insurance might not cover all your belongings or perils. Consider adding riders to your policy if you have valuable items or live in an area prone to extreme weather. Common additions include:
Scheduled Property: This insurance provides extra coverage for specific items not fully covered under standard policies, like expensive jewelry.
Pet: Covers pet-related liabilities. If your dog bites someone, this rider helps cover medical expenses.
Earthquake Coverage: Since standard policies don’t cover natural disasters like earthquakes, adding this rider is wise if you live in high-risk areas.
Liability Coverage
Liability coverage protects you from being held liable for the injuries of others. When you get renters insurance, you can select the amount of liability coverage you need. It includes:
Personal Liability Coverage
Protects you if you’re responsible for harm or damage to others. This could be bodily injury or property damage, like if an AC unit falls and damages a neighbor’s car. Your policy covers costs up to your coverage limit, including legal fees if you’re taken to court.
Medical Payments to Others Coverage
Covers medical expenses if someone is injured in your home, up to your policy’s limit. It also applies off your property, covering incidents where you cause injury elsewhere. After the injured person’s health insurance covers their part, your policy helps with the remaining expenses.
Loss-of-Use Coverage
If your home becomes uninhabitable due to a covered disaster, renters insurance will cover your temporary living expenses. This coverage pays for costs incurred while you’re displaced. The amount is specified in your policy’s declarations page, and you can choose the level of coverage.
Your insurer might suggest nearby hotels, or you can select your own within reason. It’s not meant for vacations; reimbursement is for reasonable accommodations similar to your current home.
Loss-of-use coverage also covers additional living expenses, like dining out if you lack kitchen facilities. Keep receipts for any extra costs during your displacement.
Replacement Cost vs. Actual Cash Value Renters Insurance
When you need to file a claim, you’ll receive payment through either replacement cost or actual cash value. You’ll choose your preference when purchasing the policy, and it cannot be changed afterward.
Replacement Cost Coverage
This policy covers the full cost of replacing your items as if they were new (minus the deductible).
Actual Cash Value Coverage
This option pays the depreciated value of your items. For instance, if a 10-year-old couch is destroyed, you’re reimbursed for the value of a similar 10-year-old couch (minus the deductible).
While actual cash value policies are cheaper, replacement cost policies provide more substantial payouts, allowing you to replace items with new ones. Choose based on your preference and desired premiums and deductible levels.
Learn More about Renters Insurance
It could be theft, fire, hurricane, or anything that could cause you to need renters insurance. But it’s important to do so wisely with consideration. The last thing you want to find out is that you weren’t covered as much as you thought you were.
That’s why at Dickey’s Insurance, we work with you to provide you with exactly what you need. We are here for you now and for the bumps along the way! Contact us today and ask us about how to do renters insurance right!
