Your Renters Insurance Guide

How to choose renters insurance coverage when purchasing it.

If you own a property or apartment and it causes a fire, your homeowner's policy just covers the repairs to the building. To protect yourself from financial loss, make sure you have renters or tenants insurance.

Renters insurance protections

Like home insurance, renters insurance includes three basic kinds of financial protection.

• Coverage for personal possessions
• Liability protection
• Additional living expenses (ALE)

Renters insurance doesn't cover the landlord's building or structure.

Insurance brokers and insurance agents may help you choose a good renters insurance plan or advise you on your insurance needs.

Coverage for personal possessions

Personal property protection is an element of renters coverage, protecting you from theft, fire, and a number of other unfortunate issues.

1. How much insurance should I buy?

Make sure that you have adequate insurance to replace all your individual possessions in the event of theft, fire, or other covered natural disaster. The best way to ascertain the value of all of your personal items is to create a home inventory a list of all of those things along with their estimated value.

2. Should I choose replacement cost or actual cash value coverage?

Insurance premiums typically include a deduction for depreciation, which is the idea that items lose value over time. Replacement cost protection is more costly, but it can be well worth adding on if your possessions are damaged and destroyed (for example, you could get much more money for your TV if it were secondhand rather than brand new).

3. What disasters are and are not covered?

The renter's insurance protects your property and its contents in cases of light damage, explosion, fire, theft, vandalism, windstorm, and damage from water (such as from a burst pipe or when the tenant upstairs runs the bath and floods your apartment).

Similar to regular renters insurance, most renters insurance doesn't cover floods or earthquakes. Flood insurance is available from the Federal Emergency Management Agency in addition to private insurers. If you choose to get earthquake insurance independently, it can be added to your renters policy or it can be included as an addendum.

4. What is my deductible, and how does it work?

An amount you must repay before your insurance covers medical expenses is known as your deductible. In the case where a fire leads to a total loss of $5000 worth of furniture, your deductible of $500 would apply and the first $500 of your loss would be covered by your insurance company.

Deductibles for renter's insurance are frequently listed to be a selection of dollars, which can be found on the Declarations page of your policy. In general, the higher the deductible, the lower your insurance costs will be.

5. What is a “floater” and do I need one?

A floater is an addendum to a policy that protects the most expensive items you have from loss. If you have valuable jewelry, furs, collectibles, sports equipment, and musical instruments, consider purchasing a floater to supplement your coverage.

6. Am I covered if I am traveling or away from home?

Property covered by the off-property clause in renters' policies is protected against the same perils listed in the policy. You can view the condition of your car in it, as well as the contents of the room you are staying in when you're traveling.

Liability protection

7. What is liability insurance?

Liability insurance protects you against personal-injury and property damage lawsuits resulting from your actions, your relatives' actions, and even your pets. This policy pays for legal defense on your behalf, up to your insurance limit.

Because your renters policy also includes no fault medical coverage, you can easily submit medical bills to your insurance company without having to resort to a lawsuit.

8. Do I have enough liability insurance?

Make sure that your insurance plan provides enough coverage for your assets in the event of a lawsuit.

9. Do I need an umbrella liability policy?

If you require more insurance coverage, consider investing in a personal umbrella liability policy. An umbrella policy kicks in once you hit the limit on the underlying liability for your renters or car insurance policy. It will also give you coverage for things such as libel and slander.

Additional living expenses (ALE)

ALE coverage gives you coverage if you need to relocate as a result of a home accident.

9. What does ALE cover?

Your rental insurance coverage pays hotel bills and other expenses you incur while your rental home is being repaired or rebuilt. Basically, it covers the expenses you would not have to incur if you had your customary roof over your head.

10. How much does ALE cover?

Most insurance policies will cover the money you owe between your regular living expenses and your additional living expenses. However, there are usually limitations on the total amount of reimbursement that the insurer will pay or limits on how long you'll receive ALE payments. Ensure you are familiar with the limits imposed by the policy you choose.

Multiple policy and other discounts

10. What types of discounts are offered on renters insurance?

Insurance carriers often have discounts for renters when you have a different policy with them, for example, car insurance or organizational insurance.

You'll get a discount if you take advantage of the opportunity: 

• Have a security system
• Use smoke detectors
• Use deadbolt locks
• Have good credit
• Stay with the same insurer
• Are over 55 years old