October 19, 2021
One of the upsides of renting is that you are not responsible for the building, property, or any related structures on the property—other than damage you may inflict—because you are not the owner of the property. The landlord is responsible for these and would typically insure it through a homeowners insurance policy.
But just because you don’t own the property doesn’t mean you don’t own the property contained within the house or apartment you’re renting. Should something happen to that property as a result of a fire, theft, vandalism, or other qualifying event, your personal property would not be covered by the landlord’s homeowners insurance. As a renter, to help cover your personal property, you would want to have a renters insurance policy.
Like most insurance products, you have numerous options in choosing a renters policy. Your precise coverage would depend on the carrier, policy, coverage limits, deductibles, and any special exclusions or inclusions you opt for. But, in general, here are the types of things rental insurance typically covers:
You may also opt to purchase additional coverage, typically at a premium, which may include:
Many disasters—including storms, fire, theft, and vandalism—are covered, but renters insurance typically does not cover earthquakes or floods. If you live in an area susceptible to either of these natural disasters, you may have to purchase separate coverage.
Most renters insurance policies base monetary compensation on actual cash value. This means that, if your furniture burns in a fire, they will compensate you based on what your furniture was determined to be worth at the time of the fire. So, if your destroyed recliner was five years old at the time of the fire, you would receive compensation based on the depreciated value of that five-year-old recliner.
You may opt to purchase a policy that offers replacement cost coverage. With such a policy, using the same recliner example, you would be compensated the amount of money it costs to buy a brand-new recliner. As you might expect, replacement-cost coverage is typically more expensive than an actual-cash-value policy.
Renters insurance premiums are typically significantly less expensive than homeowners insurance policies. Nerd Wallet found the average cost of renters insurance in the United States to be $168 per year, or $14 per month. By comparison, Bankrate found the average cost of homeowners insurance in the U.S. to be $1,312 per year, or $109 per month.
You have some control regarding how much you’ll pay for a renters insurance policy, depending on choices you make. To save on a renters insurance policy, consider doing any or all the following:
If your landlord requires renters insurance, then, if you want to rent from them, you will need to purchase a renters insurance policy to satisfy their requirement.
But a renters insurance policy isn’t just something you should consider because it’s required by a landlord. It could provide protection against having to pay to replace personal possessions entirely out of pocket, should they be destroyed, stolen, or damaged. That same policy could also save you a lot of money and stress should someone be injured on your property and seek compensation from you.
If you’re a renter and really don’t own much of value—or you’re confident in your ability to replace any lost or damaged property out of pocket—then you may opt to go without renters insurance. Although, the peace of mind you may derive knowing you have coverage for liability and medical issues alone could very well be worth the premium. Especially if it only averages $168 per year.
After realizing he couldn’t pay back his outrageous film school student loans with rejection notices from Hollywood studios, Sean focused his screenwriting skills on scripting corporate videos. Videos led to marketing communications, which led to articles and, before he knew it, Sean was making a living as a writer. He continues to do so today by leveraging his expertise in credit, financial planning, wealth-building, and living your best life for Credit One Bank.
This material is for informational purposes only and is not intended to replace the advice of a qualified tax advisor, attorney or financial advisor. Readers should consult with their own tax advisor, attorney or financial advisor with regard to their personal situations.
Credit One Insurance Agency, LLC’s services are not available in all states.
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