Why Do You Need Renters Insurance in 2021?

You might be asking yourself, why do I need renters insurance? You’ll require renters insurance when you’re renting a home or apartment and want to cover your personal belongings or personal property. However, in most cases, you’ll only need renters insurance if your building or landlord requires it. For your own sake, you must have renters insurance to protect yourself from catastrophic financial damages. 

For instance, have you ever considered the fact that you might be sued by someone who gets injured in your house? In such a case, renters insurance could prove important. In this article, we’ll explore some of the reasons why you need renters insurance.

It Is Affordable

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On average, a renter’s insurance policy goes for only $180 yearly, as per the (NAIC) National Association of Insurance Commissioners. However, the actual cost of the policy will depend on various factors, including the type of coverage, where you live, how much coverage you need, and the amount of the deductible.

It Will Cover Losses To Your Personal Property

This is one of the main reasons why people go for the renter’s policy. The policy will cover any loss of your personal property such as, but not limited to, computers, electronics, furniture, jewelry, clothes, and luggage. Even if you don’t own many things, this could save you the cost of having to replace everything, in case of a loss. 

For example, an HO-4 policy, which is developed for renters, covers loss of personal properties from perils such as:

  • Falling objects
  • Smoke
  • Damage by aircrafts
  • Explosion
  • Damage by vehicles
  • Theft
  • Weight of sleet, snow, or ice
  • Civil commotion or riot
  • Volcanic eruption
  • Malicious mischief or vandalism
  • Lightning or fire
  • Hail or windstorm
  • Damage from steam or water

Standard policies don’t cover losses that result from earthquakes and floods. These perils require a separate rider or policy. For areas prone to wind damages, you might also need a separate rider to cover that too.

With this being said, a renter’s insurance policy won’t cover losses as a result of your negligence. For instance, if you lit a cigarette, fell asleep, and caused a fire in the process, a renter’s insurance policy won’t cover you. 

Landlords Require These Policies

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It’s common knowledge that landlord’s insurance usually covers the grounds and structure, but not your personal belongings. Nowadays, most landlords require that you buy your own renter’s insurance, and they will expect you to provide proof of the policy.

This can either be a landlord’s idea or a direct order from their insurance company. The idea here is that if a landlord is fully covered, then specific responsibilities could be lifted from them. If you need help finding the perfect insurance, you should seek assistance from your landlord or an insurance agent.

Offers Liability Coverages

Standard renter’s insurance normally includes liability coverage. This will offer protection if someone gets injured while in your home or if a person, that is covered by the policy, injures someone. The policy will pay any court judgments and legal expenses up to the limit that is outlined.

Before coverage kicks in, you might be required to pay deductibles. With most policies, you’ll have at least $100,000 in liability coverage and a small amount of medical payment coverage. If the need arises, you can request for a higher coverage limit, but remember that this could affect the cost. 

Your Belongings Are Covered When You Travel

The good thing about a renter’s insurance policy is that it’ll cover all of your personal belongings, as long as they are with you, in your car, or the house, when you travel. Your properties are covered when you travel anywhere in the world from loss due to theft or other causes that are covered. If you want to know what constitutes other losses, you should refer to your policy or contact your insurance agent.

Covers Additional Living Expenses

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Assume a situation where you live in a mobile home for rent or a 1 bedroom apartment for rent, but it becomes uninhabitable as a result of any covered perils. For instance, there is a fire that destroys your place to the ground. In such a case, the renter’s policy may cover the costs of living somewhere else temporarily. It might also cover food expenses, and more. However, you should check with the insurance policy, or your agent, to find out how much it covers for additional expenses.

When is Renters Insurance Required? 

The only time you’ll be required to have renters insurance is when your property management company or insurance company requires you to have it. Most landlords make renters insurance compulsory to minimize the risk of tenants ever coming after them for liability costs or personal property damages.

It’s, therefore, a common thing for your landlord to ask for renter’s insurance. The good thing is that renters insurance companies make purchasing policies and comparing online quotes easy.

Do I Need It If Not Required?

While the number of building management companies and landlords who require renters insurance is on the rise, most tenants aren’t required to purchase it. Even though renters insurance may not be compulsory in your apartment, it is still in your best interest to get one. 

The renter’s insurance will lessen the financial cost you’ll incur in case of unexpected or sudden events that could leave not only damage to your property, but leave you legally liable.

Renters insurance policies will cover any of the following:

  • Personal property damage: If your property is destroyed or damaged by an event that is covered by your renters insurance, then the insurer will pay for the costs of damage up to the limit of the policy.
  • Personal liability: If you have this insurance, you’ll be protected against legal liability of any accident that happens in your residence. 
  • Loss of use: If a covered event makes your residence uninhabitable, the renters insurance policy covers any costs that exceed your normal living expenses. 
  • Medical expenses: The Policy will pay the medical expenses for any person injured in your residence.

Helpful Examples

The lower your income is, the more you need renters insurance, especially the loss of use and liability coverage. Liability damages could present a burden, especially if you don’t have enough savings. Let’s look at some useful examples of how renters insurance can help you:

Renters With Pets

Take a situation where someone who doesn’t have renter insurances owns a dog that ends up biting someone. With an insurance policy, you’ll have to pay for the damage yourself. The average claim of a dog bite in the United States costs anywhere from $30,000 to $60,000, depending on the state. This is an amount that most renters would find hard to raise. 

Wealthy Tenants

Sometimes wealthy tenants take advantage of the benefits that come with renters insurance. Although wealthy tenants can afford to avoid liability claims by coming out of pocket, when it comes to minor damage, they might not be insured for extensive damages. A cheaper renters insurance policy could cover these costs.

For instance, a dog bite may not scare wealthy tenants, but the destruction of property worth millions would. It’s therefore advisable that wealthy tenants buy renters insurance with a high limit.

Renters Forced Out

What would you do in case you are faced with a calamity that leaves your home uninhabitable? Where do you run to? In most cases, you’ll be forced to seek an alternative place to stay, which could increase your expenses beyond normal levels. Renters insurance can be a solution here. 

With renters insurance, you’ll have loss of use coverage, which covers any living costs above your normal expenses. These expenses may include special transportation, food, and hotel stay. You can use what the insurance covers until you find a new permanent residence.

College Student Not Living On Campus

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The majority of college students should think about purchasing renters insurance. This is because most students staying on campus dormitories are covered either by their ‘parents homeowners or renters insurance policy.’ Those who live off-campus, however, need an insurance policy since none of the above covers them.

How Much?

The amount of renters insurance that you need depends on several factors. When you want to decide on how much is enough, the main decision you’ll have to make has to do with your liability and property coverage. You should, therefore, get enough personal property coverage that will cover the value of your belongings. It’s also essential to get at least $100,000 in terms of personal liability coverage. These two normally cover every tenant’s largest financial exposures. They are also the main drivers of the tenant’s policy cost. 

Wrapping It Up

If you’re still asking yourself whether you need renters insurance or not, the right answer is YES, you do. It’ll provide coverage for most of your belongings, regardless of whether they’re in your car, home, or even if you’re on vacation. You’ll also get liability coverage if someone gets injured in your home. The same applies when you accidentally injure someone.

It’s, therefore, important that you understand exactly what is covered in your policy. You can also ask your agent about coverage limits, deductibles, and discounts. Even if you live in luxury 3 bedroom apartments, always ensure that you insure your belongings and cover your back.