One of the most common mistakes that tenants make is assuming that their landlord’s insurance will cover their belongings in the event of loss or damage. In addition, tenants may think that renters’ insurance is too expensive. However, the common myths associated with renters’ insurance that keep tenants from purchasing it can end up costing much more in the long run.
It’s imperative to always read the fine print in your lease. You may assume that your landlord is liable for damages caused by leaky roofs or broken appliances, but there could be a clause in your lease that negates landlord liability, such as for theft, or injuries to a guest visiting your apartment. Also, your lease may require you to obtain renters’ insurance, especially if you live in an expensive apartment. Regardless of whether or not it’s required, here are some common situations when renters’ insurance can really come in handy.
If a guest slips and falls, trips, or has any other accident in your home, you may be liable for injuries and medical bills should your guest pursue you for damage because of your negligence. It’s simple to assume that guests are safe in your house, but if they happen to injure themselves falling down on a loose step, or a heavy painting falls and hits them in the head, the medical costs can get quite expensive. And if your pet bites a guest you may also face some pricey medical bills (see Nolo's articles on owner liability for dog bites for more on this subject).
Keep in mind that while renters’ insurance can cover medical expenses of guests injured in your home, you’ll need to inquire with the company to find out if they offer medical coverage for you or anyone else who lives in the home.
In the event that your home gets burglarized, your landlord will not be responsible for anything stolen, assuming that your landlord is not legally responsible for the break-in. For example, some states require landlords to provide minimum security measures, and should a break-in occur because the security wasn’t properly provided, your landlord may hold some liability. However, if your landlord isn’t responsible, the chances of recovering your valuables are typically slim, but renters’ insurance will protect your stolen property as long as it’s listed on your policy and you meet the coverage limits.
If your rental home and property is damaged because of a natural disaster, such as wildfire, hail, or tornado, the landlord may or may not repair the home damages, but your personal property usually isn’t covered. Renters’ insurance will protect you in the event that a natural disaster occurs, but keep in mind that a few natural disaster coverage options are considered “riders,” which means they are add-on coverage, such as earthquakes, volcanic eruptions, floods, and hurricanes.
Fires due to electrical issues and short circuit damage may or may not be covered by your landlord. In most cases, it will depend upon the fine print in your lease. If it’s not covered by your landlord, you’ll be liable for smoke and fire damage not only to your own belongings, but to the property as well. If you live in a multi-dwelling building and the fire spreads to other tenants’ apartments, you could be liable for damages to their belongings as well any property damage to their dwelling.
Landlords are rarely, if ever, liable for damage that you cause yourself, such as unintentionally breaking a window which results in ruined furniture during rain, falling items that weren’t secured properly, and accidentally overflowing water. Since these types of accidents are among the leading reasons for property damage, renters’ insurance will help cover the costs of replacing or repairing the belongings. Keep in mind, though, that insurance will not cover intentional damage you cause.
There are also additional coverage options available in most instances, including:
The amount of renters’ insurance will depend on the coverage, but even though it has a reputation of being too expensive, the fact is that renters’ insurance usually isn’t as pricey as most people assume. Although rates will differ according to how much property you are covering, the type of coverage you obtain, the deductible amount, and the state you live in, sources such as the Independent Insurance Agents & Brokers of America (IIAB) estimate that the cost of renters’ insurance averages only a few hundred dollars a year for $500,000 of liability coverage and $20,000 of property coverage. Additional coverage options and riders will cost more.
Keep in mind that there are precautions you can take that will help to reduce your costs. For example, many insurance companies will reduce the price of renters’ insurance if you install a fire and smoke detector, a burglar alarm, and a fire extinguisher.
It’s important to remember that renters’ insurance is similar to auto insurance in that your coverage will rely on the type of plan you choose. For instance, you can choose to cover only certain items that you feel are more valuable, such as a stereo system, computers, and expensive jewelry, or you can choose to cover all of your belongings. Or you can set a high deductible on the liability coverage you purchase. Once you choose the amount of coverage you want, most renters’ insurance policies will cover the aforementioned damages such as guest injuries, theft, and damages you caused. Natural disaster coverage will depend upon what your renters’ insurance company offers. Be certain to shop around for the best renters’ insurance company for your needs before making a decision.
Insurance companies may offer a variety of different coverage for renters, depending on your state. For more information on renters’ insurance options in your state, contact rentersinsurance.net. Also see Nolo’s article Renters’ Insurance for some tips on choosing renters’ insurance. You’ll also find useful information on the Insurance Information Institute’s website.