When you rent a room on a property, you assume that it’s protected by the landlord’s insurance, which it most probably is. But what about the items you bring with you when you move in? Do you think your landlord’s insurance has it covered? Rather than assuming, let’s find out for real. No, landlord’s insurance only covers the structure and everything in and around the rental room for rent. So, in case there’s a theft at your place, and most of your belongings are stolen, do you have any idea what to do next? That’s where renters insurance comes into the picture!
Findings from a study by the Insurance Information Institute revealed that only 31% of renters had renters insurance. What about the remaining 69 percent? Either they aren’t familiar with it and why it’s necessary, or they think it’s beyond their budget. To save you from further anxiety, we’ve listed seven important things you need to know before going ahead and buying renters insurance.
1. Renters Insurance Safeguards You and Your Belongings
The idea of renters insurance is to protect all your belongings if there’s a theft, an accident, or a natural calamity. If your personal items are destroyed in an accident or a fire, renters insurance will do one of two things: give you the cash value of your items based on their worth at the time of damage, or directly replace the items lost. In other words, you have two policies: Actual Cash Value Policy and Replacement Value Policy.
An Actual Cash Value Policy considers depreciation and regular use to determine the destroyed property’s value. This means you pay lower premiums, but you don’t end up getting much value for the money spent. On the other hand, a Replacement Value Policy doesn’t use depreciation and everyday use to find out the value of an item. Instead, it considers what the exact item or something similar may cost per today’s market rates. You pay higher premiums, but it works well when you’ve got something costly to replace. Read the details well before figuring out which one works for you.
Renters insurance also deals with situations involving accidents with your visitors or anything that they own. In insurance terms, it’s called liability coverage. So, if your friend falls and hurts themselves and their tablet breaks, your renters insurance will pay for their medical expenses and the repair costs for their tablet. If your pet dog bites your friend, it’s renters insurance to the rescue! In fact, that’s one of the main reasons people purchase renters insurance.
Let’s consider a situation where you’re staying and working at a hotel because of some construction work in your home. You step out for a bit, come back and see that your laptop’s been stolen. Is renters insurance going to replace it? Yes, it will!
So, in specific cases, the stuff you take outside your rental’s also covered under renters insurance. And maybe even stuff that you leave in your car that’s stolen.
2. Select The Right Coverage Amount
Although the numbers keep changing, on average, renters have belongings of approximately $35,000 that they need proper coverage for. That’s a lot of money and a lot of things to own!
To help you find the coverage you need, track all your items by categorizing them into groups. Start by taking an item, write down its price (or what you remember of it), when you purchased it, and how much it’s likely to cost today. Once you’re done with the entire list, you should have a fair idea of the coverage amount you need to get.
As we already know, renters insurance includes your possessions and liability coverage that will pay for any injury to your guests or any destruction to an item they own. The coverage amount ranges from $100,000 to $500,000, so take your pick once you’ve thought it through.
3. Be Aware of What’s Not Covered
While renters insurance may cover multiple situations, there are chances you may not get what you’re looking for when you lose something, or it’s damaged in a flood, riot, or earthquake. So, what’s your next step? Maybe buy another policy that explicitly includes these situations.
The bottom line is no matter what policy you choose to get, be sure to ask for details about what it covers and what it doesn’t.
4. Club your Renters Insurance Policy
It always happens, doesn’t it? When we go shopping, sometimes we buy two or three items, but we end up paying for one! We could try the same thing with renters insurance and see if we’re lucky. You could start by talking to your car insurance company and finding out whether they offer renters insurance. If you club your renters insurance with your other insurance policies, your insurance company might be willing to offer you a discount that would help you save 10 to 20 percent off the total expense. We’re sure it’s worth a try!
5. Go for a Higher Deductible
Deductibles are amounts that you need to pay on your own before your insurer pays off the rest of the expenses whenever you file an insurance claim. The deductibles range from $200 to $1000 based on your insurance company.
If you choose to go for a lower deductible, which is clearly the easier choice, you may not need to dish out much money when filing the claim. But it might not benefit you much. However, if you decide to opt for a higher deductible, you’ll have to pay a higher amount at the time of claim filing, but your monthly premiums will be lower.
Ultimately, in the second option, you get to save money with lower premiums, and that should be enough to pay for your claim should you decide to file one when an emergency comes up.
6. Renters Insurance Isn’t Expensive
Many renters are misinformed, which is why they believe that renters insurance is unaffordable. According to the National Association of Insurance Commissioners, the average monthly cost of renters insurance is $15 to $30, which is pretty low.
The premium you pay on renters insurance depends on, for the most part, the area you live in. There are other factors such as the housing type you’re renting, whether you live on a floodplain, and the extent of your coverage. The coverage type will influence the premiums you pay.
Say, for instance, you wish to purchase a renters insurance policy for the amount of $40,000 to $50,000. In a place like Staten Island in New York, you may pay a monthly premium of $8 to $21, while for the same policy, you’d need to pay anywhere between $10 to $27 in the Bronx, New York.
So, get over your fear of spending too much money on renters insurance and consider buying it. We’re sure you spend way more on food and entertainment!
7. Renters Insurance Pays for A New Place If Your Rental’s Damaged
Depending on the coverage of your renters insurance policy, you may be able to find another reasonable rental room to live in should your current rental become inhabitable due to damage or other reasons. What’s even better is that your policy might help you pay for the rent for at least a year! Talk to your insurance company to find out more so that you’re well-informed in case you were to face such a situation.
We’ve seen and heard of cases where people didn’t think medical insurance was necessary until they had an emergency staring at them in the face! Likewise, many people believe that renters insurance isn’t critical until they find their belongings stolen or destroyed. And there’s a possibility of such incidents happening during your stay at a rental. So, without further ado, go shopping for renters insurance, and thank us later!