While no one enjoys imagining worst case scenarios, preparation for such a situation can elevate some stress later should one arise. Could you afford to replace your laptop, television, clothes and furniture if your apartment suddenly caught fire? What about adding a hotel stay into the mix while your apartment is rebuilt?
Many renters aren’t sure whether they should opt for renters insurance. However, there are more than a few reasons to get renters insurance, and most favor you over your landlord. In fact, if your apartment were to catch fire, you would receive compensation for your damaged belongings.
Are you now wondering, “Do I need renters insurance?” If you’re curious about what renters insurance covers, keep reading to learn about the different coverage options and scenarios where you’ll have protection.
1. It’s required by your landlord
An obvious reason to get renters insurance would be if your landlord requires you to do so. In most states, landlords can legally require tenants to purchase the minimum amount of renters insurance coverage. They usually set this prerequisite to avoid disputes should an unfortunate peril occur.
Your landlord should clarify that renters insurance is required before you sign a lease, but they may allow you some time to show proof of insurance after signing. Keep in mind that while coverage may not be a provision when you first sign your lease, your landlord can always add a requirement addendum — potentially at any time depending on the wording of the leasing agreement.
2. It’s surprisingly affordable
Many people argue whether renting vs. buying is more affordable. Years ago, buying would’ve won in a landslide, but the scale tips in favor of renting as average home prices rise. Average mortgage payments have hit $2,064, with the median price at $1,609. The average renter, on the other hand, pays $1,326 a month.
Regarding insurance, renting is less expensive than owning a home today. The average premium for homeowners insurance is $117 per month, whereas the average cost for renters insurance is just below $19 a month — a fairly low price for your peace of mind.
Renters can save on premiums with additional renters insurance discounts as well, such as those for:
- Setting up autopay
- Paying annual premiums upfront
- Bundling with other insurance policies
- Senior citizens or retirees
- Security systems like burglar alarms
- Pre-installed sprinkler systems
- Smoke detectors
- Gated communities
3. It protects your guests
In the event that your guest accidentally injures themselves inside of your apartment or property grounds, your renters insurance’s personal liability coverage kicks in. Liability also covers any costs for damages caused by those named on the policy. For example, liability coverage will help in the following cases:
- Your cat draws deep scratches on your guest’s arm that need medical attention.
- Someone visiting you slips on a wet floor and gets a head injury.
- A neighbor’s daughter comes over to play with your kids and gets bitten by your dog.
- Your child is playing baseball outside a friend’s home and hits a ball into a window.
These and other similar scenarios could result in responsibility for medical or repair bills. Plus, you may incur legal fees, which personal liability also covers.
Preventing these situations is close to impossible. But you can take the necessary precaution of obtaining renters insurance. On average, standard renters insurance policies cover medical payments up to $5,000 total. Medical payments exist on a per-person basis with a typical limit of $1,000. For liability charges, the minimum is $100,000.
But sometimes a particular situation results in higher costs. For example, renters with certain dog breeds have to pay a steeper monthly premium. Some insurance companies may outright deny coverage for certain high-risk dog breeds. This is why many landlords do not allow specific breeds on their premises.
4. It protects your personal property
Your landlord’s property insurance policy takes care of the losses to the actual structure, not your personal belongings. When you don’t have renters insurance, your items receive no financial coverage, and the replacement costs of your belongings add up quickly. This is where personal property coverage under renters insurance comes into play.
From clothing to furniture to electronics, personal property coverage protects your possessions from a long list of non-intentional perils, which will be discussed throughout this article, as well as damages from vehicles and aircraft. Coverage starts at $10,000 and goes up to $100,000.
5. It protects stolen items
If someone breaks into your apartment or vehicle, you can file a renters insurance claim to receive cash restitution for any stolen or damaged belongings within your coverage limits. This coverage extends for your belongings stored outside, like a bike, or within your vehicle. It also follows you while you’re not at home to cover theft that occurs off-premise of your home.
However, before receiving the insurance money, you’d have to prove that the security measures taken in your rental home weren’t lax. This can include something as simple as locking your apartment and vehicle doors.
6. It protects against natural disasters
When a natural disaster or act of God strikes, your renters insurance’s personal property coverage will cover the repair or replacement of damage to your belongings. If you purchased a high enough limit, you could receive compensation to cover all of your possessions.
While many natural disasters and weather-related instances apply for personal property protection, not all do. The following scenarios are covered:
- Volcanic eruptions
- Weight of ice or snow
- Windstorm or hail
- Falling objects, such as a tree branch
- Explosions from natural gas
The following are natural disasters not covered through standard renters insurance policies:
- Mudslides or landslides
The effects of the catastrophic disasters listed above tend to be total losses, which is why providers don’t typically include them. However, you may be able to get an endorsement for some of those listed.
7. It protects against fires
Although disastrous, fires don’t always result in total property loss. Hence, fires — whether electrical, wild, from cooking, extended from another unit and so on — are covered under personal property coverage. Similarly, you can file a renters insurance claim to receive compensation for belongings destroyed by smoke.
8. It protects against water damage
In some cases, you may find that renters insurance protects against water damage to personal property, allowing you cash benefits to replace or repair your possessions. Damages from flooding are not covered, but water damage from the following instances are:
- Faulty plumbing
- Overflowing sewer lines
- Water sprinklers
- Heating or air conditioning systems
- Frozen water lines
Although water damage through those scenarios falls under personal property protection, mold falls within a renters insurance gray area. Not all standard policies cover mold damage. You can add an optional renters insurance mold endorsement for those policies that do not. Be sure to check with your policy’s specifics on mold coverage.
Additionally, mold damage may only be covered in certain circumstances, such as:
- It developed from a burst pipe
- It formed from water used by firefighters to combat a fire
Mold damage is not covered when:
- It grew after a natural disaster or flood
- It formed as a result of a maintenance issue
The onset of the mold is also very critical for insurers. If it can be proven that the mold might have existed before the peril occurred, you might not receive financial compensation.
9. It protects against civil unrest
During times of civil unrest, renters insurance policies cover the repair or replacement of items destroyed by others. You may find coverage during the following scenarios:
- Civil commotion
- Malicious mischief
These situations could be as serious as riots or as small as Halloween pranksters who took their tricks too far.
However, it’s important to note that acts or effects of war do not classify for coverage under personal property coverage.
10. It provides additional living expenses
In the event that you need to book temporary lodging due to unforeseeable circumstances that make your current residence unlivable, renters insurance steps in to help. Whether you’re displaced due to a natural disaster or fire, you could be eligible for reimbursement for your stay and food expenses. Similar to auto insurance covering car rentals, rental insurers will set a capacity for the reimbursement amount.