What does renters insurance cover?

Renters insurance covers renter’s personal property in the event of an emergency. But do you know exactly what a renter’s insurance plan will cover? From personal property coverage to liability coverage to additional living expenses, what type of benefits can you expect from a solid renter’s insurance policy?

The Purpose of Renter’s Insurance

Many renters falsely believe that they are covered under their landlord’s insurance policy in the event of loss or damage to personal property. This is simply untrue. A landlord’s insurance policy will only cover items owned by the landlord and not what is owned by a tenant. For most traditional situations, this means that a landlord’s homeowner’s insurance policy covers the structure in which the tenant lives. So, renter’s insurance offers renter’s coverage for their personal property inside that structure in the event of loss or damage.

Do All Renters Need Renter’s Insurance?

In short, yes. The vast majority of landlords make it mandatory for renters to carry renter’s insurance at all times. Even if a landlord does not require renter’s insurance, however, it is always beneficial to have coverage if it is financially feasible.

How Much Does Renter’s Insurance Cost?

The cost of renter’s insurance varies depending upon geographic location, the property a renter lives in, pets the renter owns, and how much coverage and the type of coverage the renter desires. The average monthly cost of renters insurance, however, is around $12 per month.

What Does Renters Insurance Cover?

Personal Property Coverage

Personal Property coverage is what most people think of when they think of renter’s insurance. This type of coverage covers personal property and belongings of the renter so that in the event of loss or damage, they can be replaced.

Personal property coverage protects property under specific situations that are determined by the policy purchased. Most policies cover the same set of situations that may result in stolen items, lost items, or damaged items, these include:

• Burglary
• Theft
• Vandalism
• Freezing
• Fire
• Smoke
• Lightning
• Windstorm
• Hailstorm
• Accumulated snow, ice, or sleet
• Falling objects
• Explosions
• Volcanic eruption
• Water damage but usually NOT flood damage

Personal Property Coverage Information

Before filing a personal property claim under renter’s insurance, a tenant must always contact the authorities first and file a report when necessary. They must also inform their landlord of the situation so that they are aware of what happened. This will also enable the landlord to make any security adjustments to their property as well as fix any damage done to the property at the time of the incident.

Once the tenant has done these things, they need to contact their insurance company and file a claim. After paying a deductible for the chosen policy, the tenant will then be reimbursed for either the current value of the property that was taken or damaged or for the replacement value, depending on the policy. Any claim will be capped by the chosen plan coverage amount.

In addition, when a tenant first gets a plan, they may be required to show proof of items that they file claims on, so it is always best to take pictures of everything that they may want to be covered.

Lastly, for tenants looking for earthquake or flood coverage, this type of coverage can be hard to find. If found, this additional coverage usually causes the cost of insurance to skyrocket to the point where it is no longer affordable.

Liability Coverage

Liability coverage is offered by most renter’s insurance policies. This type of coverage protects a renter (and members of the same household) if they are found legally responsible for others being injured or for damaging other’s property.

Liability insurance protects a tenant (or household members) in the event of a wide range of circumstances including the following:

• A tenant of a multi-unit rental home that accidentally causes a fire that damages another tenant’s home. The damage to the other tenant’s home would be covered by the liable tenant’s liability insurance.
• The child of a tenant throws a baseball that breaks a neighbor’s window. The cost of replacing the window would be covered by the tenant’s liability insurance.
• A visitor to a tenant’s home trips over the tenant’s coffee table and breaks a leg. The medical bills of the injured would be covered by the tenant’s liability insurance.
• The dog of a tenant bites an individual while on the property of the tenant. The medical bills of the bitten individual would be covered by the tenant’s liability insurance.

Liability Coverage Information

In order for a claim to be covered under liability insurance, a tenant must be found at fault of a claim. The specific situation must also be covered under the stipulations of the liability coverage plan.

Once a claim is filed, the issuing company of the renter’s insurance will generally contact the individual affected and work with them and their doctors or lawyers directly. Just remember, the amount covered under a liability claim will be capped by your chosen plan coverage amount. Anything that is not covered by your liability insurance will need to be paid out of your pocket.

There are some limitations on liability coverage. These limitations are almost always on individuals who own dangerous animals. For example, if an animal has proven to be dangerous, a tenant may be declined liability coverage or they may be forced to purchase large amounts of liability coverage.

For more details on liability insurance for renters, Allstate Insurance offers a comprehensive guide to liability insurance on their website here.

Additional Living Expenses

Additional living expense coverage is offered by a rental insurance company to cover the cost incurred by a tenant when a home becomes uninhabitable. For example, while a home is being repaired after a fire, a tenant will be unable to live there. Additional living expense coverage will provide coverage for accommodations, food, and other costs incurred as the result of the rental property being uninhabitable.

• There are numerous situations in which a rental property may become uninhabitable including the following:
  A leaking pipe causes the ceiling of a rental home to collapse. While repairs are being made, the home is uninhabitable so additional living expenses would cover the expense of additional living expenses.
• A pest infestation requires a full home fumigation which makes the home uninhabitable. Additional living expenses would cover additional living expenses for the tenant during this time.
• Smoke damage from a fire requires part of a rental home to be rebuilt. During this time, the tenant must live elsewhere and their living cost would be reimbursed by additional living expenses coverage.

Additional Living Expenses Information

In order for a claim to be covered under additional living expenses coverage, the bills being covered must be bills that would not have been incurred if the tenant had been living in their rental home. This coverage will not pay anything that would normally be incurred while living in a rental property, such as school fees etc.

Additional living expenses coverage is usually determined by an insurance company as a percentage of the amount of personal property coverage a tenant holds. This percentage is 20% by standard, but individual insurance companies may set other percentages.

There is no cap on the time frame during which additional living expenses coverage can be used, but there is a cap on the amount of coverage that can be claimed. As with any insurance coverage, this is determined by the policy a tenant holds.

Buying Renters Insurance

If you want to find out more about buying renters insurance, this article from Lifehacker has suggestions on which one to buy,