Renters Insurance: What Does It Actually Cover?

Almost everyone who owns a home carries home insurance but yet so many  skip on renters insurance. Many renters don’t feel like they need to insure their belongings, we say guess again, Renters policies don’t just cover your belongings. Lets take a look at what these policies actually cover.

 

Personal Property

Yes renters insurance will cover personal property. While this is what everyone assumes this is what renters insurance is designed for this isn’t the case. The personal property coverage will help cover your belongings if you have a covered loss. Typically there are two different types of loss settlements. This would either be actual cash value or replacement cost.

The actual cash value settlement would mean that the insurance company would calculate depreciation. With the replacement they would get you a comparable item at todays cost. Lets say you have a 5 year old tv damaged in a fire. With actual cash value, the insurance company would give you what a 5 year old tv would be worth. With replacement cost, the insurance company would replace the TV with a new one similar to the one you had. Most times the replacement cost settlement does cost more but usually can be very minimal.

Personal Liability

One of the most important coverages on a renters insurance policy is the personal liability. This is designed to keep you from having to pay if you are found legally responsible for injuries or damage to another persons property. One major objection to purchasing renters insurance is that they don’t expect to have an accident, but they happen every day.

Lets say you have a guest over that trips and falls over something in your apartment. Without renters insurance, you may have to pay out of pocket if you are found responsible for their injury.  With a Renters Insurance policy, your personal liability can come into play and help pay medical bills and other damages. Most times this coverage is anywhere from $100,000 to $500,000. When shopping for renters insurance, ask your agent to give you a price comparison for the different levels of coverage. Most times the price difference is very minimal.

Loss of Use

Lets say your cooking and you apartment burns down.  Where will you go? Most renters policies include loss of use coverage to help pay additional living expenses.  This coverage may help pay for additional costs, such as hotel bills, or for the increased costs you incur on food that are above the amount you would typically spend, because you are unable to live in the apartment or home you’re renting.

Deductibles

Renters policies have deductibles range from $250 to $1500. If you have to file a claim, this will be your out of pocket amount depending on the terms of policy. Make sure to check your policy to make sure you know how you are covered and what your deductible is currently.

Cost of Renters Insurance

Many people skip renters insurance because they think it is going to break the bank. Renters insurance is cheaper than you might expect and the cost ranges anywhere from $8-$20 depending on how much personal property you own. This is a coverage you don’t want to skip out on. Typically when you purchase renters insurance you will get a multi-policy discount which will bring down the cost of your auto insurance.

 

This blog is brought to you in part by Millennium Brokers.

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