You found the perfect place to rent, and you’re ready to go. Moving company, check. Boxes and bubble wrap, check. Renter’s insurance?
If you’re wondering whether you need to purchase renter’s insurance, here are the most frequently asked questions.
What does renter’s insurance cover?
Renter’s insurance is like homeowner’s insurance but for tenants. As a start, it protects your personal belongings (that’s right, your landlord’s insurance policy will not cover your belongings) but that’s not all. It’s an important safeguard if you’re found at fault for property damage or injuries at your place (and even around the world). It also can help if you don’t have access to your apartment or home due to a covered loss.
Renter’s insurance policies offer (1) personal property coverage, (2) liability insurance, and (3) additional living expenses when your apartment or home is uninhabitable.
What is personal property coverage?
Personal property coverage protects your possessions. If they are stolen, or damaged by fire/smoke or other covered “perils,” your policy will pay for them. You’ll simply have to cover the smaller upfront fee known as the deductible.
You may choose the replacement cost or the actual cash value (ACV) for reimbursement. ACV is the amount the item is worth, minus depreciation for its age. It will cost a little more for a policy that provides replacement cost since that is higher than ACV.
With personal property coverage, you choose the amount of coverage based on how much your stuff is worth. The good thing is that your possessions are insured whether they’re at your place or away from it. For example, if you have a child away at college, who has an item stolen, your policy will pay 10% of your Personal Property Coverage C limit.
Note: Some policies limit certain types of possessions, such as jewelry. If you want a higher limit, you will need to add it to the policy.
What is liability coverage?
Liability coverage protects you if someone is injured and you’re legally liable. It could be at your place or it could be anywhere in the world. For example, if your dog bites someone, you’re covered. The policy pays for the bite victim’s medical expenses and covers court fees if they sue you. Liability also covers accidental damages to the place by you or your guests. So, if you accidentally set fire to your apartment, you’re covered. There are limits, so talk to your insurance advisor about an umbrella policy, which will provide much greater coverage.
What is loss of use coverage?
If a covered danger, like a fire or an evacuation, causes your residence to be unfit to live, your policy reimburses you for additional living expenses. For example, if you normally spend $200 per month on food and now it’s costing you $300, the policy will reimburse the additional $100. There’s a time limit and a dollar limit on this, so check on your policy’s details. Payment will be for the shortest time required to repair or replace the damage or, if you permanently relocate, the shortest time required for your household to settle elsewhere. It’s worth noting that if you have a Coverage Enhancement, there’s no deductible.
What exactly is the deductible?
If a loss does occur, a deductible will often apply. A deductible is the amount that you are responsible for, before the policy pays anything. So, before you get replacement or ACV for your possessions, you pay the deductible out of your pocket. Your deductible could be $250, $500, or more. You have a choice on the amount of the deductible. The lower the deductible, the more expensive the policy.
Note: There are times when there is no deductible. In a personal liability policy, for example, a deductible does not apply.
What isn’t covered by renter’s insurance?
Renter’s insurance doesn’t cover every situation. It does not cover damage from earthquakes, mudslides or floods. It does not cover infestations of rodents or bugs. There’s only limited coverage for theft of jewelry and firearms. A standard policy doesn’t cover your roommate’s possessions (though you could add them as an endorsement known as “Other Members of Your Household” for little or no cost). Renter’s insurance also doesn’t consider your car as one of your possessions. You need a separate auto insurance policy.
Note: Ask your insurer about home office and business computer coverage. That’s different than a personal policy.
Is renter’s insurance required?
Renter’s insurance is not mandated by law, but it may be required by your landlord, property manager or owner. Renter’s insurance helps keep others, including you, from seeking damages from them, even though they’re not responsible for your possessions. If you accidentally start a fire, the landlord’s insurance kicks in after they pay the deductible. But they could use your renter’s policy to cover that cost, so it’s a win-win for them.
What happens if you don’t have renter’s insurance?
If you don’t have renter’s insurance, you’re fully responsible for any property damage or loss. You’ll have to replace your possessions in the event of theft, fire, or other perils. You’ll have to pay the medical costs of anyone injured in your apartment. You’ll have to pay for additional living expenses if your apartment is inhabitable.
How expensive is renter’s insurance?
Renter’s insurance is surprisingly affordable. For as little as $10 a month, you can get a renter’s policy at California Casualty. The cost varies depending upon the coverages you choose, the deductible, your financial responsibility score, and multipolicy discount. Even your location can have an impact. Areas with higher crime rates will have higher insurance rates.
How much renter’s insurance do you need?
You want to have enough insurance to cover your possessions and any potential liability. Start by taking an inventory of what you own and putting a dollar figure on replacing our possessions. Then, take a look at your liability. Do you entertain a lot? Do you have pets? Determine the potential for injuries on site or any other property damage. You also want to take into consideration the amount of assets you have – such as your savings, etc. You want to make sure the amount you select will cover your assets. Then, choose the deductible that is affordable for you.
Can you get renter’s insurance after you’re already moved in?
Yes. You may purchase renter’s insurance at any time. However, it’s not retroactive. You cannot buy it after there’s been damage or theft.
Not all renter’s insurance is the same. Some policies cover more than others and costs vary. Check with your insurance provider to find out the options.
This article is furnished by California Casualty, providing auto and home insurance to educators, law enforcement officers, firefighters, and nurses. Get a quote at 1.866.704.8614 or www.calcas.com.
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