According to survey results, 60% of millennials who rent or lease their homes don’t have renters insurance.
One of the reasons was survey participants didn’t understand how renters insurance works. Another factor was a majority of people thought their landlord’s insurance would cover them.
Finally, 29% of respondents assumed renters insurance costs several hundred dollars more than it does.
Have you yet to take out renters insurance? Maybe because you’re not sure how it works, whether it’s necessary, or what it costs?
If you’re wondering “what is renters insurance and do I need it?” Keep reading this guide to renters insurance to discover why it’s a vital insurance type to hold.
What Is Renters Insurance For?
Wondering what is renters insurance? A renters insurance policy, also known as tenants insurance, offers some of the benefits of homeowners insurance, but without coverage for your dwelling.
The purpose of renters insurance is to cover you in a similar way to homeowners insurance. However, because you don’t own the dwelling you’re renting, coverage doesn’t extend to the physical structure.
What Does Renters Insurance Cover?
The exact coverage you’ll get will depend on the individual renters insurance policy. However, renters insurance usually covers three main areas. These are personal property, liability, and emergency/alternative accommodation expenses.
Like homeowners insurance, a typical renters insurance policy usually covers personal property.
This includes things like electronics, furniture, jewelry, and clothing. Some basic renters insurance policies won’t cover certain personal items if they are above a specific value. Such as highly valuable art, collectables, and jewellery.
In this situation, you can choose to add on additional coverage for these through a rider or floater.
However, for a lot of people, a basic renters insurance policy is enough to cover their personal belongings. If unforeseen events damage your home’s contents, you should be able to claim for most of the lost items providing they are of standard value.
Another big perk of renters insurance is it usually covers items even if they were stolen or damaged away from your home. For instance, if you take your laptop on a trip and it gets stolen, you might find that you can claim for it through your renters insurance policy.
Another important area that a renters insurance policy covers is liability. The best renters insurance policies cover damage and injury to both third parties and property.
For instance, let’s say someone visits your rental home. They then trip on a cord across the hallway, fall, and break their ankle. You’ll be covered against any liability.
This extends to any legal defense costs you incur up to the value of your policy.
The best renters insurance should also include no-fault medial coverage. This allows anyone who suffers injury on your rental property to send their medical bills directly to your insurer. Without having to open a lawsuit.
If someone’s personal property is damaged in your home (ie. someone comes to stay and your dog chews up their $1,500 handbag) your renters insurance policy will usually provide coverage for that.
A renters insurance policy can also cover you against damage to neighbors’ properties that you might accidentally incurr.
For instance, maybe one of your kids accidentally kicks a ball astray. It then breaks the neighbor’s window. The best renters insurance policies will cover you for that.
Additional Living Expenses (ALE)
Besides offering coverage for personal possesions and liability cases, renters insurance often includes additional living expenses (ALE) coverage.
This gives you financial protection and coverage against expenses you might incur if an uninsured distaster requires you to seek alternative accommodation. For instance, if your rented home is flooded, or becomes unlivable through something like smoke damage, mold, etc, your renters insurance may cover costs associated with finding alternative accommodation while the rental is restored to a livable condition.
This usually includes things like hotel bills, restaurant meals, and temporary rental costs. Most renters insurance policies will cover the full difference between your usual living expenses and temporarily inflated ones.
For instance, lets say you usually spend $4,000 on rent and groceries. But you have to suddenly spend double this because you’ve been displaced from your rental. If so, ALE will typically cover the difference.
There is a cap on this however. Most policies have a either a total dollar value limit or a time limit on ALE payments.
Do I Need Renter’s Insurance?
If you’re wondering “do I need renters insurance?” the answer is yes. Renters insurance provides you with a valuable safety net against unforeseen disasters. As well as liability cases and losses/damage to personal property.
It provides the same security that homeowners insurance does, but at a fraction of the cost. What’s more, policies are tailored to suit renters.
Speaking of costs, did you know that renters insurance costs far less than most people think? In Ohio, the average renters insurance premium is less than $170 per month. This is substantially lower than homeowners insurance premiums, which clock in at $875 on average.
At the same time, you will get a lot of the same benefits that you would if you were paying for homeowners insurance.
The reason for the big price difference is that your renters insurance policy won’t have to cover the physical structure of your rented home. Thist is the landlord’s property and responsibility.
Are You Looking to Buy Renters Insurance?
Renters insurance providers a high level of security and coverage for comparatively low premium costs. Unfortunately, a lot of people don’t really understand the answer to “what is renters insurance.” Because of this, they don’t realize how valuable and vital this insurance type is.
Just because you’re renting doesn’t mean you shouldn’t have financial protection should things go wrong.
After reading this guide to renters insurance, are you looking to buy renters insurance for yourself?
If so, we can help. Contact Gessels and Associates today to discuss your needs and we’ll help you find the best renters insurance for your needs and budget.