The backbone of any renters insurance policy is personal property coverage—in other words, protection for all your belongings. Renters insurance also provides personal liability coverage as well as loss of use coverage if you’re temporarily forced from your home.
What is renters insurance?
A renters insurance policy helps protect the things you own, as opposed to the building you live in. Your landlord has insurance to cover that. Here are the main areas of coverage you’ll get with a renters policy.
Personal property coverage
Renters insurance pays to repair or replace your personal property if it gets damaged or stolen. Common items covered by renters insurance include computers, bicycles, clothing and furniture.
Your items don’t have to be inside your apartment to be covered. For example, if someone steals your laptop from a hotel room, your renters insurance can cover you. Many people think that your auto policy would apply here, but it’s actually your renters policy
Liability and medical coverage
Renters insurance can also cover you if someone gets hurt and you’re found responsible. For example, if a guest at your home accidentally trips and falls, and then files a lawsuit against you, renters insurance can help pay for your guest’s medical expenses, as well as your defense and court costs.
Furthermore, liability is not tied to the apartment, so the incident could happen anywhere. Let’s say your dog knocks someone down at a park and injures them. If you were sued and found liable, your renters insurance could pay up to the liability limit amount on the policy.
Loss of use coverage
If you’re temporarily forced out of your apartment due to a fire or some other covered event, the loss of use portion of your renters insurance could help with emergency living expenses. This means it could help pay for your hotel, your meals and other related expenses.
Can I add more protection to my renters policy?
Yes, you can always add other coverages onto your renters insurance policy to maximize your protection. Cyber protection is a good example of a valuable add-on coverage for renters, as it will help keep you one step ahead of cyber criminals.
Additionally, if you live in an area prone to flooding, you may want to purchase a separate flood insurance policy. That’s because renters insurance does not cover damage caused by flooding. A separate earthquake insurance policy is something else you should consider depending on where you live.
What is a covered event?
Renters insurance will only cover your belongings if they’re damaged by a peril that is listed on your renters insurance policy. This would make it a covered event. Typical covered events include:
- Fire or lightning
- Windstorm or hail
- Smoke
- Vandalism
- Theft
- Weight of ice or snow
Some of these covered events can be complicated. For example, let’s say the ceiling of your apartment caves in from too much ice and snow, and your television is damaged as a result. In this case, your landlord’s policy will pay to repair the ceiling, while your renters insurance policy will help pay to replace the television.
Actual cash value vs. replacement cost value
Replacement cost value
Pays you to replace the damaged item with a new, similar item.
Actual cash value
Pays you what the damaged item is worth at the time of the loss.
Let’s say the sofa you bought for $1,000 five years ago is damaged in a fire. If your renters insurance policy provides for actual cash value, you’ll receive what your sofa is currently worth—which might be $600 due to depreciation.
If you have replacement cost value, you’ll receive the value of a new sofa of the same size and quality. In this case, you may receive $1,200 due to inflation.What isn’t covered by renters insurance?
Renters insurance won’t cover damage to the physical structure of the apartment or rental property. Typically, the landlord’s insurance covers that. In addition, renters insurance does not cover you if your belongings are damaged by a flood or earthquake. That’s because flood insurance and earthquake insurance are both separate policies.
Something else to remember is that your renters insurance policy won’t cover your roommate’s belongings. They’ll need their own renters policy to be protected.