Renters insurance 101

I didn't think it would ever happen to me

We've all heard stories about the friend of a friend who lost everything in a fire, or who was sued when someone slipped on a rug. Those aren’t urban legends, they happen to real people every day. And as boring as it sounds, renters insurance is a sound investment – it can protect your personal belongings and save you from legal or medical expenses associated with an accident in your home. Consider:

I don't have enough stuff to need insurance

Really? You could be right – but take a careful look around the room. What would it cost to replace all that stuff? Most renters underestimate the value of their possessions and experts say there probably isn't a scenario in which a tenant should go without renters insurance.

My landlord will cover property damages, right?

Generally a landlord's policy only covers the structure, not the content or any of the tenant’s belongings. Even if the landlord owns the appliances or other items within your rented home, they’re not responsible for damages they may cause to your property. Examples:
  • Let’s say you just loaded up the freezer (owned by your landlord) with a few hundred bucks worth of frozen food for a big party you plan to throw. Then the freezer breaks down and all the food spoils. The landlord is off the hook… but if you had a renter’s insurance policy the party might still be on.
  • So your toddler left the water running in the sink and it overflowed into the apartment below causing damage to that tenant’s property? Who pays? Hint: it’s not the landlord. Your renter's policy – if you have one – will cover the damage up to your liability limits.

How to choose a renters insurance policy

Most renter’s insurance policies cost less than $200 a year (usually even less expensive when bundled with your car insurance), but each person’s coverage needs are different and based on factors like age, location, and protection needs from things like natural disasters. In general, there are two important areas to understand when choosing a renters insurance policy:
  • What the policy covers, and
  • Whether that coverage is for the actual cash value or for total replacement cost
An actual cash value policy would cover your belongings for what they are worth today, meaning that big screen TV that cost $1,000 a few years ago might only be worth a couple hundred now… ouch. Actual cash value plans costs less – but will only pay you for the depreciated cash value of an item.

Total replacement policies pay out the amount it costs to actually replace your property today. So you’d be able to replace that $1,000 TV with a comparable model without any additional cost. Replacement cost policies usually have a slightly higher premium, but they may be worth it - that’s a decision you’ll need to think about.

Make sure you're protected

Get a free insurance quote today. Or call us at 1-800-443-6316 for help determining what types of coverage, if any, you should consider.