When you’re renting an apartment or a house and experience a disaster like a fire or a flood, it’s important to know what your renters’ insurance covers for the costs associated with repairing the building. That means if you want to protect yourself adequately in terms of your finances, you will have to buy an insurance policy known as renters insurance in the market.
Many people don’t have a good understanding of renters insurance, resulting in paying hefty sums when disaster strikes. We can help in identifying what to look for when buying renters insurance.
Just like with homeowner’s insurance, renters insurance also provides three different types of financial protection, which are:
- Liability protection
- Coverage for personal possessions
- Additional living expenses (ALE)
The only major difference between the two is that there is no coverage for the structure or building in renters insurance, which is considered the landlord’s responsibility.
If you have any questions regarding renters insurance, please don’t hesitate to call us. We are also sharing a list of FAQs on renters insurance that can be of help to you:
1. How Much Insurance Should You Buy?
When buying renters insurance, you must buy enough coverage to cover all of your possessions in the event of a fire, a burglary, or any other covered disaster. To find out how much coverage you’re going to need, you should create an inventory list of all your most valuable possessions and their estimated value to give you a clear idea.
2. Should I Choose Actual Cash Value or Replacement Cost Coverage?
There are two main types of coverage offered to you in renter’s insurance, and you must choose the one that most suits your needs. If you opt for actual cash value policies and a claim is filed, your contents will be assessed, including depreciation deduction. For example, if you had a TV that you bought for $1,000 and was 5 years old at the time it burned in a fire, the insurance company could deduct $600 and only pay you $400, stating that that is the depreciated value of the TV at the time of the claim.
On the other hand, replacement cost coverage policies, which tend to be more expensive, cover belongings at the price it costs to replace them. For example, in the same scenario listed above, the TV that you bought for $1,000 would have a claims payout of $1,000, granted it would cost that much to replace the TV with a similar model.
3. What Disasters Are Covered?
When it comes to the list of disasters covered in renters insurance, the list can be extensive depending on the type of policy you purchase. Typically, you will get coverage from fire or smoke damage, vandalism, explosion, theft, lightning, windstorm, and water damage. Renters’ insurance policies will not cover floods or earthquakes.
4. What Is My Deductible, and How Does It Work?
The deductible is the amount you need to pay after a loss and before your insurance coverage starts. For instance, if you’ve got a $1,000 deductible and a fire destroys $6,000 worth of furniture, you will be responsible for paying $1,000, and the insurance company will cover theremaining$5,000 worth of damage. Keep in mind, when your deductible is larger, your insurance premiums get lower.
5. What Is a Floater (or Rider), and Do I Need One?
You may need to get a separate policy for expensive valuables to ensure that you are covered for loss and damage. That is known as a floater (or rider) policy. If you have expensive furs, jewelry, musical instruments, sports equipment, or collectibles, consider adding a floater (rider) to your renters’ insurance policy to protect against any damage or loss.
6. Am I Covered If I Am Traveling or Away from Home?
You will get off-premises coverage in most renters’ insurance policies, ensuring that you get the same level of coverage and protection when you are away from home. For instance, if you have property stolen from your hotel room or car when you’re traveling, it will be protected by the policy.
7. What Is Liability Protection?
Most renters insurance policies offer liability coverage to protect you from lawsuits for property damage or bodily injury done by either you, your pets, or your family members. The coverage will cover all the associated court and legal costs and cover up to the policy’s limit.
Another coverage to consider adding to your renters’ policy is medical payments coverage. The medical payments coverage will protect anyone who gets injured on your property. Their medical bills are submitted to your insurance company for reimbursement.
8. Do I Have Enough Liability Insurance?
You must check if the amount of liability coverage that is offered by your policy is enough to protect your material and financial assets if you were to get sued. Being underinsured with liability coverage can mean losing your assets and savings.
9. What Does Additional Living Expenses Cover?
Your rental insurance policy may include additional living expenses coverage, covering all costs associated with hotel bills, restaurant meals, temporary rentals, and all other incurred expenses. In essence, it will cover the expenses that you wouldn’t have to incur if you were living in your rental home.
10. What Type of Discounts Are Offered on Renters’ Insurance?
Typically, you’ll receive a multi-policy discount on your renters’ insurance policy if you have another policy with the insurance company, such as business insurance or car insurance. You can also get a discount in the following instances:
- A security system is installed
- You have good credit
- You use deadbolt locks
- You have smoke detectors
- Loyalty Discount (for remaining insured with the same carrier)
The discounts you qualify for will vary from state to state and from one insurance company to the next, so ensure that you take your time to weigh your options and get the best deal.