Choosing the Best Renters Insurance Company

If you're one of the vastly growing number of people who are renting property, you would be wise to consider getting renters insurance. Many renters think that their landlord's home insurance covers their possessions, and only find out the truth when it's too late. Some landlords also require you to get renters insurance as part of your contract.

If your home is burgled, or there’s a fire or natural disaster that destroys or damages your things, you want to know that the best and most reliable renters insurance has got your back.

Here are a few points to look for when choosing the best home insurance company for renters:

• How much do premiums cost, and what is the size of the deductible?
• What is the maximum claim amount? Check that you can claim enough to cover the cost of replacing or fixing your possessions if anything should happen.
• Does the insurance company respond quickly when you make a claim and process the details speedily? You don't want to spend months hanging around waiting for your claim to go through to be reimbursed.
• Is the insurance company supported by reliable underwriters who are not likely to go bankrupt?
• If there are specific add-ons that you need, check that your company offers them.

Types of Renters Insurance Policies

There are almost as many different kinds of renters insurance policies in the US as there are for homeowners insurance. The most common type of renters insurance policy is called HO-4. It's designed to cover damage caused by something known in the insurance industry as the "16 perils." Each "peril" is an incident that can cause damage to your possessions and is covered by your policy. They include:

• Natural disasters like hail, lightning, volcanic smoke
• Human-related incidents like theft or vandalism
• Damage caused by equipment, like a burst mains pipe or fire caused by a short circuit

The Basic Renters Insurance Plans

A basic renters insurance plan covers 3 different types of risk, which are likely to occur during your regular life. The three basic renters insurance plans cover:

• Personal property plans cover the cost of replacing or repairing your possessions if they get damaged, destroyed, or stolen. For example, if a water pipe were to burst in your bathroom and flood over into your kitchen, ruining your new laptop, personal property coverage will pay to replace the laptop.
• Liability plans include the cost of fixing someone else's property if you damage it, or paying for someone else's medical bills if they get injured in your home. For example, if your child throws a ball through the window, smashing the glass, liability insurance will pay to fix the window.
• Living expenses means that if something happens to make your home uninhabitable, your insurance company will pay for you to stay somewhere else. For example, a fire breaks out in your apartment, and you can't live there until the smoke damage has been treated. Your living expenses insurance plan will pay the cost for you to stay in a hotel until you can return to your apartment.

The Add-Ons

Insurance plans don't usually include events that are extremely unlikely, like damage from a tsunami if you live in Idaho. They only cover common perils. If you live in a place that is at risk from uncommon threats, it's wise to buy an add-on policy to cover those situations. Here are some common add-ons for renters insurance:

• Earthquakes. If you live in an earthquake zone like California, you'll probably want to buy an add-on renters insurance policy to cover your possessions in case of damage due to an earthquake. Look for companies that have experience in dealing with earthquake claims.
• Floods. Standard renters insurance covers you for damage due to a burst pipe within your home, but not for flood damage from outside your home. If you live in a hurricane zone, for example, you might want to buy a flood damage add-on policy, and a policy for hurricane wind damage as well.
• Replacement costs. Although your basic renters insurance policy covers the cost of replacing or repairing your possessions, the insurance company might decide to only pay you the actual cash value of your item instead of the replacement value. If your possessions are very old or depreciated, you might not get enough money from the insurance company to be able to replace them. You can choose to upgrade to a replacement cost value plan, which guarantees to replace that item with a new or similar item, no matter how old it is.

How to Save Money on Renters Insurance

Everyone wants to find ways to pay less for their renters insurance. One of the best options is to bundle together more than one insurance plan at the same time. Often, insurance companies will give a discount if you buy both your renters insurance and your car insurance from them, for example.

Another approach is to find ways to make your home more secure. Insurance companies may give you a discount on your premiums if you have a working security system, smoke detectors, burglar alarms, and other measures to minimize the risk of damage to your possessions. If your home doesn’t have any of these security features, it’s worth talking to your landlord to see if they’d agree to install them.

Regulation Information and Underwriting

Renters insurance is like homeowners insurance and other types of insurance, so it’s regulated by state law, not federal law. As a result, each state can have different regulations for renters insurance, so make sure that you know what the requirements are in your state.

Usually, underwriting for renters insurance is broadly similar to that for other types of insurance. The underwriter might consider issues like where your home is located and what natural disasters are likely in your region. They will also look at your history of previous insurance claims, any claims by previous tenants in your home, and sometimes also consider any hazards in your home or building, like the pet you own, a nearby swimming pool, or a trampoline in the garden.