EVERYTHING YOU NEED TO KNOW ABOUT
Are you thinking about or currently renting an apartment or home, but not sure if you need Renters Insurance?
Does your landlord require Renters Insurance?
There are many reasons to purchase renters insurance, besides being required to and we'll discuss in this article.
Some questions you might have about renters insurance:
1. How to pick the best renters insurance company?
2. What information do they need for a renters quote?
3. How to buy a renters policy?
Purchasing insurance to cover your home may seem like something you only have to do once you’ve bought your first house.
But, even if you are renting, insurance is a smart investment.
Renters insurance protects you against damage and loss to your personal property, including from fire, theft, and other types of losses, such as water damage. In addition, renters insurance provides coverage for accidents that occur in or around your home.
Many landlords actually require their tenants to purchase a renters insurance policy. But even if you are not required to have this type of insurance, it is generally a good idea to purchase it.
Not only will it cover your personal property in the event of a break-in, fire or other incident, it will also shield you from liability in other situations, such as if your dog bites a guest while they’re in your home. It is a relatively inexpensive way to protect your assets and give you peace of mind.
This guide will help even novice renters understand the basics of this type of insurance. By providing an overview of the best renters insurance companies, the typical cost and coverage of renters insurance policies, and potential pitfalls, our guide to renters insurance will help you make the best decision when it comes to choosing a renters insurance policy.
What Is Renters Insurance?
Renters insurance is a type of insurance policy that is primarily designed to provide coverage for your personal property.
It generally will reimburse policyholders for the cost of replacing their personal property if it was damaged or lost by theft, fire, vandalism or other disasters.
This type of insurance policy is important to have, because landlords are typically not responsible for damage or loss to renters’ personal property unless their negligence somehow led to the loss.
Renters Insurance will also generally provide a hotel room if your home is uninhabitable for a period of time due to an issue such as fire or water damage.
In addition, renters insurance typically covers personal property when it is outside of the policyholder’s home. For example, if you take your laptop with you on vacation and it is stolen, your insurance may cover the cost of replacing it. A renters insurance policy will often cover damage to other people’s property, such as if you accidentally break an expensive item at a department store.
Further, renters’ insurance will also provide coverage if someone else gets hurt on your property — including both legal and medical costs and other damages. It will also cover damages to your rental that you may cause. For example, if you allow your bathtub to overflow, causing water damage, then your insurance company will typically pay for the repairs, or the cost of the lawsuit if your landlord sues you.
Ask a Renters Insurance Professional for Advice
Of course, every insurance policy is different, so renters should carefully review their policy to check terms and limits. Be sure to get coverage for the items that you need, and understand that there will likely be exemptions for certain types of natural disasters (such as for hurricane damage in Florida or earthquake damage in California).
How Does Renters Insurance Work?
If you have decided that you need renters insurance, applying is a relatively simple process.
Most insurance companies offer a free online quote, which you can do after submitting basic information about yourself, including your name, address of your rental.
Insurance companies will also offer quotes over the phone or in-person. Once you have selected an insurance company, then you can choose a policy, keeping in mind that the higher deductible you choose, the lower your premium will be — and vice versa.
The insurance company will then walk you through the application process.
What Renters Insurance will do if you have a loss
Renters insurance will pay your costs if you suffer a loss, such as a theft or a fire. The amount of compensation that you will receive will depend on the type of policy that you have in place as well as the type of loss that you suffered. For example, if you have chosen actual cash value versus replacement cost for your policy, you will typically receive less in reimbursement for your personal property.
If you have suffered a loss, you should start by letting your landlord and/or the police know (generally, the insurance company will require a police report if there has been a break-in). Then your other information, including an inventory of your personal property, your insurance information, documentation of any damage suffered, and any police reports or witness statements, is necessary. Next, contact your insurance company as soon as possible; many require policyholders to file a claim within 48 to 72 hours after a loss. Your insurer will ask you to fill out a claims form and cooperate with its investigation. Finally, you will be able to collect on your claim.
What Are the Best Renters Insurance Companies?
There are a number of renters insurance companies on the market. Here are some top choices for you to consider, if you are in the market for a renters insurance policy.
Lemonade is a relatively new insurance company, founded in 2015 in New York City. It offers renters insurance with applications that take just 90 seconds to be approved. When policyholders submit a claim, they can be paid in minutes. With Lemonade, there are no brokers, paperwork or hassle. Their policies cover policyholders’ phones, laptops, bikes and more, both inside of their home and beyond.
Jetty is also a new insurance company that sells renters insurance “for the price of a latte.” It offers quotes in 10 seconds, along with unique coverage options such as bedbug riders, personal electronics protection and extended Airbnb host protection. In addition, if your home becomes uninhabitable, Jetty will cover your living costs.
Allstate is a well-known insurance company, offering a number of products, including renters insurance. It has a repayment limit of $1,000 on individual items without personal property coverage, and will reimburse your living costs if your home is uninhabitable. Allstate’s liability coverage will protect you against legal and medical bills, as well as other damages if a guest suffers an injury at your home.
Nationwide offers a range of insurance policies, including renters insurance that offers personal property and liability coverage. Its renters insurance policies offer reimbursement for additional living expenses if you cannot live in your home. In addition, if someone is injured in your home, Nationwide will pay for damage or bodily injury expenses, and may help pay for medical or funeral expenses.
Liberty Mutual offers renters insurance policies for as little as $12 a month. Its policies will protect your personal property from theft or damage, whether they are in your home or outside. You also have the option of adding liability coverage, which will protect you if you accidentally damage someone’s property or if injuries occur within your rental.
American Family Insurance
American Family Insurance offers a fairly standard renters insurance policy. It will assist with the cost of replacing your belongings if they are damaged or lost by a fire, theft or water damage, or other covered losses. The policy can also include liability coverage for injuries to other people or damage to property other than your own. American Family Insurance also covers living expenses if your home becomes uninhabitable due to a covered loss.
Insurance giant GEICO has a unique feature that helps prospective policyholders determine how much insurance they need — a personal property calculator. As part of a GEICO renters insurance policy, you can add liability coverage, which will cover injury to another person on your property, including medical and legal costs.
State Farm’s renters insurance policies cover personal property, including computers, furniture, electronics, bikes and other items. Covered losses range from weather to theft to vandalism to aircraft and vehicles. Policyholders can receive discounts if they have other policies through State Farm, such as their car insurance.
The Hartford offers coverage for personal property, living expenses if your home is uninhabitable, and legal defense up to the policy limit. In this sense, it is a fairly typical renters insurance policy.
Farmers Insurance allows policy holders to extend coverage for their personal belongings if their value is greater than the limits in the policy. It also offers coverage for liability, in the event that a guest is injured in your home.
MetLife offers customizable coverage for your belongings in case they are lost or damaged. With each policy, MetLife gives policyholders identity protection services, as well as excellent customer service.
Erie Insurance covers living expenses if you cannot remain in your home due to damages, as well as medical costs if someone is injured in your home. In addition, Erie Insurance will cover your personal property if it is damaged or lost.
How Much Does Renters Insurance Cost?
The cost of renters insurance will depend on a number of factors:
1. the insurance company you select
2. the amount and type of coverage you select
3. where you live.
According to insurance expert Stefan Tirschler, product and underwriting manager at Square One Insurance Services, rental insurance can range significantly in price.
For some renters, the monthly premium for a renters insurance policy may be as little as $15 per month — or less.
The cost will depend on factors such as “…what kind and amount of coverage you choose to purchase; loss statistics for the location where you are renting; the deductibles you choose; and your own personal insurance history.”
If you have previously made property insurance claims, you may see higher quotes for a period of time. It is important to choose the right kind of policy to fit your needs. A “named perils” policy will only cover the listed risks, while an “all risk” policy will cover all possible causes of loss, other than a short list of exclusions.
What Does Renters Insurance Cover?
While every renters insurance policy is different, most cover certain basic items, such as damage or loss to personal property.
That being said, every renter should carefully review the terms and conditions of an insurance policy before signing it to be sure that the coverage is appropriate for his or her needs.
Renters Insurance is broken down into four basic categories of coverage's
2. Loss of use
4. Medical payments.
Renters can then customize their policy to include additional coverage.
Contents coverage is for personal property, which includes everything that will be moved into your rental home.
Brad recommends getting a replacement cost value policy so that your possessions will be replaced with a like kind and quality product, rather than an actual cost value, which may not give you enough money to actually replace what you have lost.
Loss of use coverage helps you find a place to live and cover those expenses if you cannot live in your home due to a loss. While it will not pay your rent, it will make sure that you are not also paying for a hotel or other living arrangement.
Liability coverage protects you from lawsuits. If someone is injured in your rental, the insurance company will defend you in a lawsuit and cover the costs.
Medical payments coverage will pay if someone is hurt in your home. Unlike liability coverage, this is no-fault coverage, which means that your guest does not have to sue you or prove that you were negligent in order to have their medical bills paid.
Should College Students Take Out Renters Insurance?
While renters insurance is generally a good idea for most people who do not own their homes, it isn’t always the best choice for college students.
That is because many homeowners insurance policies actually cover children living away from home — such as college students.
If your parents have a homeowners insurance policy that offers this coverage, then they will not likely need renters insurance.
According to John Espenschied, owner of Insurance Brokers Group, college students are generally covered under their parents’ homeowners insurance policies.
The personal property protection of the homeowners insurance policy will extend to the child’s belongings that are outside of the home — like being away at college. This is particularly important because insurance companies will not write a renters insurance policy for a student living in a dorm.
However, many landlords will require that students have a separate renters insurance policy if they live in an apartment outside of the dorms. For any students whose parents do not have homeowners insurance or whose policies do not cover them, renters insurance is a good idea to not only protect their personal property, but to shield them from liability.
What Are Some Potential Problems with Renters Insurance?
While there are many benefits to renters insurance, there are potential pitfalls. Being aware of how renters insurance works can make sure that you are fully covered — and that you are not liable for any injuries that may occur at your home.
First, if you have roommates, you should be aware that most renters insurance policies will require you to get separate policies. Typically, a renters insurance policy will only cover you and the family members who live with you. While some insurance companies may allow you to split a policy with your roommates, this could backfire if your roommate makes a claim and it goes against your personal history. Be sure to check with your insurance company to be sure that you are fully insured.
Second, if you have a dog, it is vital that you have a renters insurance policy. Not only could your dog damage property, it could also bite another person. Having an insurance policy will protect you from lawsuits and pay for any damage that your dog may cause.
Third, if you have any particularly expensive property, such as jewelry, art or electronics, you’ll want to talk to your insurance broker about coverage for these items. You may need to declare them separately in order for them to be covered on a separate rider, which may cost an additional fee.
Should I Get Renters Insurance?
If you rent, buying renters insurance is often mandatory.
Even if your landlord does not require a policy, having renters insurance usually makes good financial sense.
For a relatively low monthly premium, your personal property will be protected from loss or damage, and you will have additional coverage from lawsuits and other liabilities.
However, depending on the policy that you choose and other factors, renters insurance can be expensive — and may not cover you fully. But if you want to make sure that you are protected in the event that something unexpected happens, renters insurance is often a sound investment.
About the Author: Michael Brown is a Research Analyst at LendEDU, a personal finance comparison site based out of Hoboken, New Jersey. In his role, Michael uses both survey and publicly-available data to identify and analyze emerging personal finance trends, in addition to telling unique stories with original data. Michael's work has been featured in just about every major media outlet, including The Wall Street Journal, The Washington Post, Forbes, Bloomberg, and CNBC. In his free time, Michael enjoys resting with his 15 year old dog Bosco, attending the world's biggest horse racing events, and brushing up on his U.S. history.