Lenders usually require a homeowner to have homeowner’s insurance but renters also should obtain renter’s insurance to cover their belongings and some liabilities. The landlord has insurance to cover the building itself but not your possessions, which many renters don’t realize.
Good Reasons To Get Renters Insurance
Renter’s insurance is affordable and most people underestimate how much their “stuff” is worth. Just your clothes and electronics could cost several thousand dollars to replace if you stopped to add it all up.
What Renters Insurance Covers
Renter’s insurance covers your personal property, which includes furniture, luggage, clothes, jewelry and electronics. You might not think it adds to much but think about starting over from scratch. The website esurance.com estimates the average renter’s possessions could be valued at as much as $20,000.
A typical renter’s insurance policy covers damages from aircraft, cars, falling objects, smoke and fire, household appliances (plumbing, sprinkler system) plus theft and vandalism. Flood and earthquake damage are covered by separate policies.
Some landlords (or their insurance companies) require their tenants to have renter’s insurance to limit their exposure.
Renter’s insurance isn’t just content insurance. It also provides liability coverage that pays for court judgements and legal expenses if someone is injured in your home or you injure someone.
It also protects your belongings from loss or theft when you are traveling.
Finally, renter’s insurance might cover “additional living expenses” such as food and lodging if you are displaced from your home due to something covered by your policy.
What Your Landlord Should Cover
Your landlord’s insurance should cover damage to the building from the usual perils, such as fire, storm, lightning, explosion, theft and malicious mischief. It also should cover liability claims for common areas of the property outside of the area you are renting.
Finally, be sure to check whether your insurance provides “replacement cost coverage” or “actual cash value.” The first pays the replacement value, without considering depreciation. The second only pays what the lost item is worth today, regardless of when you bought it.