Why Buy Renters Insurance?
Insurance experts recommend that all renters buy renters insurance. It’s a common misconception that a landlord’s insurance on the building protects the tenants as well. However, that’s not the case. The insurance on the apartment building only covers damage to the building itself. Individual renters who lose property in a theft or fire, for example, are not protected at all by insurance coverage on the apartment building. That makes it all the more important to buy renter’s insurance.
Benefits When You Buy Renters Insurance
It’s important to know what coverage is offered by renter’s insurance and what gaps might still exist. First, take a look at the coverage you can expect from any basic renter’s insurance policy:
- Basic coverage. In the insurance industry, homeowner’s policies offer coverage against a variety of so-called “perils.” When you buy renters insurance, you are getting the same coverage as a basic homeowner’s policy, protecting against fire or lightning, hail or windstorm, explosion, riot or civil commotion, aircraft, vehicles, smoke, vandalism, theft, damage by glass or safety-glazing material that’s part of a building, volcanic eruption, falling objects, weight of ice, snow or sleet, water-related damage from home utilities and electrical surge damage. Common coverage limits are $30,000 to $50,000, but more can be purchased at a higher cost.
- Liability coverage. You may not think liability is important in an apartment since you don’t own the building and aren’t legally responsible for the upkeep of the property. But what if someone visits your apartment and slips and falls in the kitchen or bathroom. Or if a visitor is attacked by your poodle? Renter’s insurance will offer coverage in the event you are sued for damage to someone who visits your apartment.
- Type of coverage. There are two main types of basic coverage and it’s important to know the difference between the two. With actual cash value, you will get money to replace stolen computer and stereo equipment, for example. But the amount you get will be equal to what the stolen equipment was worth when it was stolen. Replacement cost coverage, which is more expensive, pays to replace the item at today’s cost.
- Living expenses. When you buy renter’ insurance you also get coverage in the event a covered event, such as a fire or tree that crashes into your apartment building, forces you to seek other living arrangements. Additional living expenses, as they are known in the industry, are usually a percentage of the overall policy amount and are often limited in time, such as six months or a year.
What’s Not Included When You Buy Renters Insurance
Depending on where you live in the country, there are two main holes in renters insurance, according to experts. One is for damage sustained in a flood. If rising water from a flood – such as a daylong deluge or an event such as a hurricane – damages your belongings, that will not be covered by renter’s insurance. The same is true of homeowner’s insurance, which also doesn’t pay for damage due to flood. Instead, there are flood policies issued by the federal government and available through local insurance agencies. The second thing usually missing when you buy renters insurance is damage caused by an earthquake. Again, a separate earthquake policy is needed for any losses in an earthquake.