Whether your landlord required is or not, renters insurance is incredibly useful for protecting your belongings. Renters insurance provides compensation if your personal belongings are lost or damaged due to a variety of dangers.
This includes:
- Fire
- Lightning
- Smoke
- Windstorms
- Hail
- Civil riots
- Vandalism
- Theft
- Volcanic eruption
- Explosions
- Damage by aircraft or vehicle
- Weight of snow, ice or sleet
Most renters insurance policies are named perils policies. This means that only perils explicitly listed on the policy (as above) will be covered, and anything not listed will be excluded. Common exclusions from renters insurance include floods, earthquakes, burst pipes and sewer damage. You can typically purchase separate policies for each of these dangers.
Renters insurance also has limited coverage on the items it covers. Expensive or antique items such as jewelry, art and furs, have very limited coverage. For jewelry, basic renters insurance policies typically cover only $1,000 to $1,500 after loss or damage. You can add policy floated to protect these items, however.
Liability Coverage Under Renters Insurance
Renters insurance doesn’t only cover against physical threats. It also covers you against financial threats. Personal liability insurance is included on basic renters insurance policies to step in if the tenant causes bodily injury or property damage to someone else. This can include damage and injury caused by children and pets. Liability insurance help with the cost of medical bills for the victim as well as legal fees, should they decide to sue. For example, if a guest trips and breaks their ankle in your apartment, liability insurance will compensate them for their medical expenses and provide you with coverage for any legal fees that arise due to the accident.
How Does Renters Insurance Compensation Work?
Renters insurance will reimburse you for damage and loss of personal belongings caused by incidents involving any of these occurrences. Compensation can be received two ways: actual cash value or replacement cost value. An actual cash value policy will compensate you with the current market value of your lost belongings. This means that as the cash value of your items go down, so does the amount of compensation you receive. A replacement cost value policy replaces the item with one of similar or equal value, not counting depreciation. This policy is typically more expensive, but is more likely to replace your belongings completely than an actual cash value policy.