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The Ultimate Guide to Renters Insurance

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Guide to Renters Insurance
Sarah Pritzker
Sarah Pritzker
Jun. 01, 20224 min read
Home insurance isn’t just for homeowners. Renters need home insurance, too. Renters insurance might not be talked about as often as home insurance, because you don’t have a mortgage company insisting you get it, but it’s every bit as important. Here’s a complete guide to renters insurance, to help you understand your options and prevent nasty surprises.

What is Renters Insurance?

Renters insurance is a type of insurance that covers your possessions in case of damage. If something happens to your home, like a fire, your possessions could be seriously damaged or even destroyed. Renters insurance helps you pay to fix or replace your belongings if anything goes wrong.

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Why Should You Get Renters Insurance?

Many renters wonder why they should get renters insurance, because they don't think they have a lot of possessions or think that their things aren't very valuable. But take a short moment to think about all of the things you own. You might have a laptop or desktop computer, a tablet, and a smartphone. All of this tech can be expensive to replace. Perhaps you also own a large collection of shoes. If your shoes cost $50 a pair, and you have ten pairs, that's $500 gone up in smoke if a fire breaks out in your apartment. Renters insurance steps in to help pay those costs.

If a disaster happened, whether natural or otherwise, and damaged or destroyed all of these items, you'd have to spend a large amount of money on replacing them all. There's a common misconception that your landlord's insurance or your parents insurance covers your personal belongings, but that's not the case at all. It would all come out of your own pocket - unless you have renters insurance.

Renters insurance can also help you out with a few other difficult situations. For example, renter's insurance can help pay for you to stay somewhere else for a few days if your apartment or house is unlivable. It also covers you in case someone gets hurt in your home.

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What Kind of Renters Insurance is There?

There are several different types of renters insurance policies, but you're most likely to need HO-4 renters insurance. This is the standard renters insurance policy that covers you for damage caused by "named perils" like volcanoes, hail, or lightning strikes, man-made disasters like vandalism, or theft, or damage from an electrical fault, fire, or floods.

It’s very important to read the list of named perils, so you know what your renters insurance covers.

What Does Renters Insurance Cover?

In general, renters insurance plans cover you for three different types of risk:

  • Damage to your personal property
  • Liability for harm caused to someone else
  • Living expenses if your home becomes unlivable

When you get renters insurance, you’ll mostly be thinking about the coverage to fix or replace your possessions if they get damaged at home, or if someone breaks in and steals them. It’s useful to know that most renter's insurance policies also cover your possessions outside of your home.

Many people don't think about liability insurance for renters, but fortunately, that's included as part of most renter's insurance policies. Your renter's insurance will cover your liability and pay up for you if someone is hurt in your home.

Liability insurance also covers you for damage that you cause to other people. For example, if your kid breaks a neighbor's window with a baseball, or your blocked sink causes a flood in the apartment below you. Your liability insurance could even pay your legal fees if you are sued over these kinds of damages.

Finally, living expenses coverage is often overlooked, but it can be a lifesaver. It means that if your home becomes uninhabitable, your renters insurance policy will pay for you to stay in a hotel or a temporary apartment for a few days until you can move back home. If a fire breaks out during the night and you can't afford to pay for a hotel room, living expenses coverage literally keeps a roof over your head.

What Isn’t Covered by Renters Insurance?

Like everything else in life, renters insurance has exceptions. There are some natural disasters that aren't covered by standard renters insurance, like tornadoes, earthquakes, or floods. If you live in a neighborhood that's at high risk from these events, you'll want to pay an add-on to extend coverage. For example, Florida dwellers should buy hurricane insurance; California renters should add earthquake coverage.

You should also check if your renter's insurance policy pays the cost of replacing your personal possessions. Some policies only pay the actual cash value of your items. For example, if your couch goes up in flames, an actual cash value policy will only pay the amount you'd get if you sold it. But a replacement policy will cover the cost of buying a brand new couch.

How to Save Money On Renters Insurance

Although you want good renters insurance, you don’t want to pay more than necessary. That’s why it’s worth comparing the cost of renters insurance from a few different insurance companies.

You can usually pay less for your monthly premiums if you choose a larger deductible, or agree to a smaller cap on the total insurance payout. Just make sure that your renters insurance is still sufficient for your needs. You don’t want to save money on renters insurance, only to find out that you don’t have vital coverage when a disaster strikes.

What if My Landlord Already Insures My Home?

Your landlord's home insurance doesn't usually cover you, as well. Unless you have an unusually generous landlord who specifically offers to pay for renters insurance for you, the landlord's insurance only covers the structure of the building and their own possessions.

So, if there's a fire that damages the walls, carpet, and furniture in your apartment, as well as your possessions, your landlord's insurance will only pay for the damage to the apartment itself and any furniture that they own. It won't pay for damage to your possessions - for that, you need renters insurance.

Switching from Renters Insurance to Homeowners Insurance

If you’re about to stop renting a home and become a homeowner yourself, congratulations! There’s a lot to think about when you buy a home, but fortunately, switching from renters insurance to homeowners insurance is pretty easy.

Most insurance companies that offer renters insurance also provide homeowners insurance policies, so you can simply call or email them to change your policy type without having to go through a long and complicated application process, or pay the penalty for canceling your insurance policy. It also means that you can keep any perks or discounts that you earned as a loyal customer, like discounts for an insurance bundle that includes car and home insurance.

Sarah Pritzker
Written bySarah Pritzker

Sarah Pritzker is a content writer with years of experience and a keen interest in the vast world of online consumer products. She writes for BestMoney and enjoys helping readers make sense of the options on the market.‎

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