How Renter’s Insurance Can Protect Your Stuff – And Wallet

Insurance typically pays for covered losses if something happens to your property. Your landlord’s homeowner’s insurance can repair the home and land damage. However, it will not pay to replace your belongings should something happen. 

Renter’s insurance can cover your personal belongings in case of theft, fire, water damage, and more. You can select a policy that fits your budget and needs. Since renter’s policies do not cover the household, they are significantly more affordable than homeowner’s policies. 

Primary Renter’s Insurance Coverage

Since homeowner’s insurance does not cover your personal belongings, your landlord may require you to have a renter’s policy. Personal property includes your furniture, electronics, and other valuables. A policy could pay you the value of your personal property if it is damaged, destroyed, or stolen. 

Renter’s insurance policies vary by provider, but most pay for damages from smoke, fire, water, theft, vandalism, and natural disasters. Depending on where you live, some coverage types may be additional, such as flood coverage if you live in a flood zone. 

Protection From Lawsuits

The property owner may also require renter’s insurance for the liability coverage. Liability coverage reduces your financial risk if someone sues you. 

Your landlord’s policy will only protect them if someone sues for an injury sustained at your home. For instance, a delivery person could file a lawsuit after slipping on your front steps. They could sue both you and your landlord if the injury is due to carelessness, such as not shoveling your walkways.

Insurance can pay damages and losses you are responsible for covering, such as medical bills, property repairs, and court costs. Likewise, insurance can protect your personal liability, such as if your pet or family harms someone. However, it will not cover your medical and other expenses. 

Umbrella or Excess coverage has higher limits for personal liability claims. And insurance companies may have no-fault medical coverage for friends, guests, and neighbors injured at your home.

Temporary Housing and Relocation Claims

Additional Living Expenses (ALE) coverage can pay for relocation and temporary housing expenses should your home become inhabitable. For instance, you may need to relocate because of property damage or natural disasters. 

If your renter’s insurance has ALE coverage, it can cover the cost of hotels and temporary rentals until you can live in your home again or find other permanent housing. It may also pay for food and restaurant meals during the transitory period. 

Rental Insurance Types

A renter’s insurance policy may pay either the actual cash value or replacement cost for your damaged or stolen personal belongings. Actual cash value policies consider depreciation and may pay less than its original cost. Replacement cost policies pay the amount to replace the item.

For example, let’s say someone stole a computer you bought two years ago for $2,000. An actual cash value policy may only issue a $500 payment. A replacement cost policy would cover the price of a comparable computer, such as $1,500 for a model with similar features. The amount may still be less than the initial purchase price since a similar computer is probably cheaper today.

Open Peril renter’s insurance offers broad and comprehensive coverage. It covers any event that results in the loss of your personal belongings. However, an Open Peril policy may exclude a specific hazard, such as floods. 

Amount of Renter’s Coverage

Most insurance companies sell both homeowner and renter’s policies, so they can offer a wide range of coverage to fit your needs. Create a list of personal property and items along with each one’s worth or replacement cost. You can include everything you own, like appliances, bedding, clothing, dishes, electronics, and furniture. 

An inventory of your personal belongings can also help you should you need to submit a claim. It may be your responsibility to show proof that you owned covered items. Consider an electronic file to store receipts and pictures. 

Renter’s Insurance Claims

Before contacting your insurance provider, you generally need to report a fire, theft, or covered event to your local law enforcement. The insurance company will likely need a police report officially detailing the incident. You may have a time limit to make a claim after the incident.

The insurance representative may be able to provide information about covered belongings, claim amounts, and processing times. The law requires insurance companies to send claim forms within a short period of you notifying them. 

Renter’s insurance policies have a deductible, which is the amount you are responsible for paying before the company pays the claim. For example, you may receive only $1,000 for a $1,500 claim if you have a $500 deductible.