If you rent a house or apartment and experience a fire or other disaster, your landlord’s insurance will only cover the costs of repairing the building. To financially protect yourself you will need to buy renters or tenants insurance.
Like homeowners insurance, renters insurance includes three key types of financial protection:
The big difference is that renters insurance doesn’t cover the building or structure of the apartment—that’s the landlord’s responsibility.
The following questions will help you choose the right coverage when you are shopping around for renters insurance or discussing your needs with an insurance professional.
Coverage for your personal property is a key component of renters coverage, protecting you from theft, fire and a host of other unfortunate events.
The easiest way to determine the value of all your personal possessions is to create a home inventory—a detailed list of all of your belongings along with their estimated value.
Replacement cost coverage is pricier but can be well worth the extra expense if your belongings are damaged or destroyed. Think about how much you’d get for your TV used versus how much it would actually cost to replace.
You can get earthquake insurance as a separate policy or have it added as an endorsement to your renters policy depending on where you live.
Renters insurance deductibles are generally specified as a dollar amount which can be found on the Declarations page of your policy. In general, the larger the deductible, the lower your insurance premium.
A floater is a separate policy that provides additional coverage for more costly valuables if they are lost or stolen. If you have expensive jewelry, furs, collectibles, sports equipment or musical instruments, consider adding a floater to your policy to protect against their loss.
Most renters polices include what is called off-premises coverage, which means belongings that are outside of your home are covered against the same disasters listed in your policy. For example, property stolen from your car or a hotel room while you’re traveling would be protected.
If you need a larger amount of liability protection, consider purchasing a personal umbrella liability policy. An umbrella policy kicks in when you reach the limit on the underlying liability coverage provided by your renters or auto policy. It will also cover you for things such as libel and slander.
Additional living expenses (ALE) coverage provides coverage if your home is destroyed by an insured disaster and you need to live elsewhere for a time.
The additional living expenses portion of your rental insurance policy pays for hotel bills, temporary rentals, restaurant meals and other expenses you incur while your rental home is being repaired or rebuilt. Essentially, it covers the expenses you would not have to incur if you had your usual roof over your head.
Most policies will reimburse you the full difference between your additional living expenses and your normal living expenses.
However, there are generally limits as to the total amount the insurer will pay or time limits specifying how long you’re eligible for the ALE payments. Make sure you’re comfortable with the limits of the policy you choose.
Insurance companies often offer discounts on renters insurance if you have another policy with them, for example, car insurance or business insurance. You may also get a discount if you:
Discounts may vary widely by insurance company and by state, so review your options carefully. As always, the same rule of thumb applies: shop around for the best deal.