There are numerous benefits to renting. Whenever something breaks, you can call your landlord and, hopefully, get it fixed. In some cities, renting is cheaper than owning a similar place, once taxes and interest costs are taken into account.
However, just because you don’t own a piece of property doesn’t mean you shouldn’t have insurance. Renters insurance is inexpensive and, like all insurance policies, invaluable if you end up needing to use it.
Renters Insurance Covers Personal Property
Oftentimes renters believe that their landlord’s insurance covers their property. This is untrue. Landlord insurance protects the building and the landlord. In the event of a fire, the landlord’s insurance will cover the cost of rebuilding. In the case of theft, the landlord can claim his property, like lobby furniture or laundry machines.
Unfortunately for the tenants, everything that’s in apartments is excluded from the landlord’s insurance policy. Damages to your personal property are your responsibility. Luckily, renters insurance is easily less than $200 per year, making it highly affordable.
Renters Insurance Might Cover Lawsuits
Another misconception is that renters are not liable for injuries or damage. Like with the above examples, if a person is injured in the landlord’s part of the building, say by falling down the stairs or by slipping on an icy walkway, that person can sue the landlord for damages, including hospital bills and lost wages. If the person injures them self in your apartment, the landlord is usually not responsible and the cost of damages falls on your shoulders. The same holds true for damage you cause other tenants in the building, perhaps by causing an accidental fire or flood.
Renters Insurance Covers Displacement Costs
With homeowner’s insurance, the insurance company will pay for you to move out and stay in a hotel while repairs are being done to the home. The same is true if you have renters insurance. Imagine the worst case scenario, your apartment has flooded and your personal property is ruined. Without insurance, you’d be forced to find short-term accommodation and pay to replace your damaged stuff. With renters insurance, your insurance company would pay for your accommodation, moving expenses and give you money to replace your property.
Renters Insurance Market is Competitive
Like homeowner’s insurance, the market for renters insurance is highly competitive. This is good news for tenants since it means great discounts can be had, as long as you shop around. Make a list of items you own, as well as their approximate replacement cost. Then, tally up the list and talk to a broker about the different policies you can buy.
There are two types of renters insurance policies. The first, called actual cash value, will replace the cost of your items at today’s value. A 10-year old computer, for example, might have cost $1,500 to purchase, but its actual cash value might be closer to $100. In that case, the insurance company would pay you $100.
The second type of renters insurance is called replacement cost. Replacement cost will pay you the amount it costs to replace you items. If it costs $1,500 today to replace that same 10-year old computer, that’s the amount the insurance company will pay under a replacement cost policy. Obviously, replacement cost is the more appealing policy. Luckily for renters, the cost is only slightly higher than an actual cash value policy.
Renters shouldn’t assume that their landlord will always be looking out for them. While landlords are responsible for providing a safe and dry place to live, they aren’t responsible for your personal property, nor are they responsible for anything that gets you sued. With low-cost renters insurance policies available, there’s no reason not to get renters insurance.