Renters insurance, though often overlooked, is valuable coverage that can protect your personal property in the event of a disaster. If you rent your apartment or home, you should consider investing in a renters policy even if it's not required. Many people are not aware of how rented property will be covered under the landlord's own policies. While the building will remain covered even if tenants are living in it, personal property, possessions, and belongings will not. If you rent your space and experience a total loss, nothing within the building will be covered under your landlord's homeowners policy. While it may not be as common as a traditional homeowner or property policy due to the lack of regulation, renters insurance can prove just as necessary in the event of a claim
Three Main Coverages of Renters Insurance
A renters insurance policy is typically broken out into three main policy sections: Personal Possessions, Liability, and Additional Living Expenses.
This coverage will compensate you for the losses incurred with regard to your personal belongings and possessions. Essentially, anything you own that is housed within your rented space will be covered under this section of the policy. This can include anything from clothing and technology to furniture and jewelry. In order to secure this coverage, you will need to make a schedule of possessions and include everything you want to be protected under this policy. Only the items listed will be covered in the event of a claim. It is important to note that only items within the internal space of your rented unit are covered. Items kept outside, such as a bike or your car, are not covered. To be safe, it's recommended to keep a spreadsheet of your belongings and update it as soon as you acquire something new.
There are two options for coverage on possessions: actual cash value policy and replacement cost policy. A replacement cost policy will compensate you the amount of money it costs to replace the item at the time of the loss. An actual cash value policy would factor in the depreciation and compensate you for the full value of the item. When choosing your renters policy, make sure you understand which type of compensation you would receive and which is more optimal for your scheduled possessions.
Liability coverage on a renters insurance policy will cover you for 3rd party property and liability claims. Similar to how a homeowners policy would cover you if you caused damage in someone else's home, renters insurance provides the same benefit. It also includes no-fault medical coverage in the event someone is injured in your home. These coverage sections include the cost to defend coverage to compensate you for any legal fees incurred due to a claim, up to the policy limits. However, this policy will not cover any damage done to your own physical property, as that would fall under the landlord's homeowners coverage.
Additional Living Expenses Coverage
Additional living expenses coverage is a huge benefit to a renters insurance policy. If the loss experienced in your rented space forces you to leave and find temporary housing, the policy will reimburse you for all additional living expenses that occurred while your home is being fixed. This means any amount higher than your standard rent that comes from hotel bills, airbnbs, etc will be reimbursed by the policy. It will also cover transportation costs, restaurants, and any living expenses that developed from the loss of the rental space. The policy will continue to pay these expenses as long as it takes to make your rented space livable again, up to the policy limits.
What Perils Will Renters Insurance Cover?
Renters insurance will act when a claim is filed under circumstances of fire, theft, plumbing, certain natural disasters, falling objects, and vandalism. Certain natural disasters, like tornadoes, fires, hail, rain, and snow damage (non-flooding) are typically covered. Renters' insurance will not cover damage resulting from flooding, earthquake, sinkholes, or pests.
Do Businesses Need Renters Insurance for Leased Offices?
In short, yes. Businesses that rent or lease their space should have Business Renters Insurance. Most landlords require proof of coverage before moving forward with a lease for any business. This is technically a type of renters insurance but will look different as it is tailored specifically to businesses, and commercial practices, and is in most cases included with a business owner's policy.
How Much is Renters Insurance?
Renters' insurance can vary in price, but generally speaking, is very affordable. The prices will vary based on the risk of your location, and the items listed in your scheduled possessions. However, on average it should range between $180 and $400 a year. If your state or specific area has increased theft, burglary, or natural disasters you may see higher prices. Likewise, if your area is safe and not prone to weather-related damage, you will have a relatively low premium. As with any insurance, shop around for comparison. There are many new programs that add renters insurance at a lower cost and it's best to see what options are out there before moving forward.
Who Should Buy Renters Insurance?
While renters insurance is mostly optional, if you rent your home or apartment you should absolutely have it. A disaster is unlikely, but they do happen and you may not realize how much you actually own. If you experienced a total loss, you’d want to ensure your belongings can be replaced without causing even further financial burdens. Plus, the housing protection it can provide if you lose your home is well worth the relatively small investment of a renters policy.
Learn More About Renters Insurance with ECBM
Not sure if you need renters insurance, or want to review your current program? ECBM can help your business stay compliant with insurance needs and has experienced consultants available to help. With so many coverage options, carriers, and policies available for businesses and individuals, it can be hard to keep track of your insurance needs. Contact ECBM to find out more about our services and expertise.