Renter’s Insurance – A Must or a Bust?

A considerable portion of the population rent an apartment, home or a condominium. Since the landlord usually has insurance, tenants often do not consider getting one. While your landlord may have property and liability insurance, this only protects the structure you are renting. This does not cover your personal property from damage or loss. Renter’s insurance and liability coverage aims to protect tenants from losses such as theft, vandalism, explosions and other named perils.  Although this is not a state requirement, most homeowners require this from their tenants.  This actually makes sense, your landlord will not pay for losses or damage to your belongings in the event of fire or hail storm, among other things. Renter’s insurance protects you from a wide spectrum of elements that you need to be insured from.

There are two forms of home or residential insurance designed to aid renters.  First is the HO4 – Renter’s Insurance, this is a coverage you can use if you are renting an apartment or a home from loss or damage of their personal property.

The second form is HO6 which covers people who own a condominium or a townhouse. Similar to the HO4 policy, this covers your personal property and provides liability protection. HO6 also covers all the fixtures and home upgrades that you have done since you moved in. This is also a requirement if you have a mortgage on your unit.

There are a few important aspects that you should consider when purchasing a Renter’s Insurance.

What belongings should I ensure?  You need to list all valuable items that you own, make an inventory of your belongings so that you track them in case of loss. If you do not own much property a Renter’s insurance is still important because it also protects you from personal liability.

How much will you get to replace your belongings?  Once you have listed all your valuables, you need to talk to your insurance company to determine if they will offer an ACV or “actual cash value” where they will pay for what an item costs at the time it was stolen or damaged. For example you bought a cellular phone at $100 last year, the phone will be worth considerably less today. When you file a claim, the insurance company will only give you the amount the phone is worth minus deductibles.

If your policy indicates a replacement cost this means that the insurance company will give you the amount it takes to replace your phone. Although a replacement cost means a higher insurance premium, it also has a higher pay out when you file a claim.

How else are you protected? A renter’s insurance provides additional protection in cases where it becomes impossible for you to live in your home by providing “additional living expenses”

What exactly is liability protection?  This simply means that if someone in your home or apartment gets into an accident, your insurance company can cover the cost, depending on your limit. This is quite useful if you get sued because of an accident occurring in your home.

How can you reduce your cost? Your premium will always depend on your location, deductible, additional coverage you may need and the insurance company you have chosen. Increasing the amount you pay or your deductible can help reduce cost, as well as installing additional safety features and considering the pets you own. Some insurance policies may refuse coverage if you own certain breeds of dogs.

Even if you do not own your home or the building you live in, making a move and protecting yourself from unforeseen circumstances will certainly help you in enjoying your personal space.