guide to renters insurance

When you rent a property, your landlord is only responsible for the structure itself. When a natural disaster or other incidents damage the structure, they — or their insurance — are responsible for covering the cost.

They have to fix the plumbing when there’s a leak or replace certain appliances when they break, but they are not responsible for any of your property. For example, if your belongings are stolen or a fire starts resulting in the loss of your family heirlooms, your landlord does not have to cover the cost.

That’s where personal rental property protection — or renters insurance — comes in handy. Renters insurance will cover the cost of damage or loss caused by several incidents, including theft, natural disasters, and vandalism.

What Does Renters Insurance Cover?

Renters insurance is a great way to protect your belongings from specific unforeseeable incidents. However, just like any other type of insurance, the details of a rental agreement can vary, depending on the state, property or insurance agency. To find out what your rental insurance policy covers, you’ll need to read your agreement thoroughly and consult with your insurance agent.

However, there are a few qualities that are common in most policies. Renter’s insurance generally covers:

Your Personal Property

Most rental insurance policies will either replace or cover the cost to replace your personal property if it’s damaged, lost or stolen. Personal property may include any electronics, furniture, jewelry, clothes or appliances of value. Your property will be replaced if the damage was caused by:

  • Fire
  • Smoke
  • Vandalism
  • Theft
  • Hail or windstorms
  • Lightning
  • Falling objects
  • Explosions
  • Weight of ice, sleet or snow
  • Electrical surges
  • Water, including appliance or plumbing failure, fire sprinklers or other emissions of water.

Personal Liability and Medical Bills

If you have guests at your rental property, renters insurance will cover any medical expenses if someone is hurt on the premises, whether from a slip, fall or animal bite. The policy should cover any medical expenses incurred from the injury and any liability if the injured guest takes legal action.

Temporary Living Expenses

If your rental property is damaged and you’re unable to live there anymore, a renters insurance policy may cover the costs of a temporary living situation. These costs could be hotel bills or any food bills that exceed your usual grocery budget. Your insurance will likely cover these costs until your rental property has been repaired or until you find a new place to live.

Credit Card Fraud

rental property break in credit card fraud

If someone breaks into your rental property and steals your credit cards, debit card, checkbook or any other type of banking information, your renters insurance should reimburse you for any losses.

Other People’s Property

Renters insurance doesn’t just cover your property. If you have a valuable item in your rental property that you’ve borrowed from another person and it gets broken, lost or stolen, the cost of the item may be covered by your insurance policy.

Personal Property Stored Elsewhere

Most renters insurance covers all your personal property, even if it’s not stored within the walls of your rental property. If your property is damaged while stored in your car or in a storage facility, it may be covered by your policy.

What Doesn’t Renters Insurance Cover?

While renters insurance is an invaluable tool that can protect you from specific incidents, it doesn’t cover everything. Although every policy is different, most do not cover:

  • Certain natural disasters: Most renters insurance policies don’t cover damage caused by flooding, earthquakes or sinkholes. However, if you live in an area where these types of natural disasters are common, you can buy additional, separate coverage to protect yourself.
  • Property damage caused by pests: If any of your property is damaged from pests like bugs or rodents, the cost of the damage will likely not be covered by renters insurance.
  • Items above a particular value: If you have particularly expensive items in your rental property, like art, vintage jewelry, family heirlooms, premium appliances or rare collections, your renters insurance may not cover the cost if they are lost, damaged or stolen. To make sure these items are covered, you may need to purchase additional insurance. To find out if your high-value items are covered, consult with your insurance agent.
  • Damages from terrorism or nuclear war: Before the events of 9/11, renters insurance covered any damage caused by terrorism. Today, you’ll need to have a separate insurance policy to protect yourself.
  • Your roommate’s property: If you have renter’s insurance, your property may be protected from certain types of damage, but your roommate’s property may not. However, if you’re living with another person, you can always purchase joint insurance.

What Should I Consider When Choosing a Renters Insurance Policy?

find a renters insurance agent you trust

Figuring out what you need to know before you buy renters insurance is a critical step. Since every policy is different, your best bet is to find an insurance agent you trust and work out the specifics of your insurance policy with them. However, there are a few things to consider before you go policy shopping, like:

How Much Coverage Do I Need?

To determine how much coverage you’ll need from your renters insurance, you’ll need to consider several factors, like the value of your property, your budget limitations, and where you live. While every policy is different, most policies are broken down by:

  • Personal property damage coverage, which covers the cost of any property that’s stolen or damaged.
  • Personal liability coverage, which covers any legal costs resulting from an injury that occurs in your rental property.
  • Medical payment coverage, which covers any medical expenses incurred by anyone injured on the property.
  • Loss of use coverage, which covers the cost of temporary housing and other expenses if the rental property becomes uninhabitable.

When you go to purchase renters insurance, you and your agent will review each component to decide how much coverage you’ll need in each category. Taking an inventory of your belongings helps you determine how much property damage coverage you’ll need.

Take pictures of your valuables and record their serial numbers, if they have one. This will help you make a claim if they are stolen or damaged beyond recognition. If you can, make a list of all the valuable items you own and keep it somewhere outside your rental property, like at a trusted friend’s home or as an attachment to an email you’ve sent to yourself.

You’ll also need to consider if you need any additional coverage for especially valuable items. Basic insurance might not cover items valued over a certain dollar amount, so you’ll need to consult with your agent to decide if you need extra coverage to protect your most precious belongings.

Do Landlords Require Renters Insurance?

If you are renting a piece of property or apartment, you are not required by law to purchase renters insurance. However, your landlord may require you have renters insurance before you can move into a property. If you don’t purchase insurance, they have the legal right to reject your application.

Every landlord has a different policy. Some require that you simply purchase the insurance, while others may specify how much liability coverage they expect you to have.

Landlords often require tenants to have coverage to protect themselves. Having insured tenants reduces the landlord’s liability and the chance that you will try to collect damages from them. If your property is stolen or someone is injured in the rental property, a landlord is less likely to be sued or held liable if the tenant’s renters insurance covers the cost.

To prove you’ve purchased the insurance, most landlords request a copy of the policy. However, some may require that they are listed as an additional interest, meaning that they will be notified if the policy is lapsed or canceled.

What’s the Cost of Renters Insurance?

Many renters, especially those with tight budgets, tend to skip renters insurance because they think it’s too expensive. However, on average, renters insurance ranges from only $15 to $30 per month.

If you still think it’s too expensive, consider the cost of the medical and legal bills you’d have to pay if a guest gets injured on your rental property. While it might seem you’re paying for nothing, you’re actually paying to avoid a much higher expense in the future.

How Does Renter’s Insurance Coverage Work?

how does renters insurance work

While the specifics of each renters insurance policy are different, the basics remain the same. You and your insurance company will arrange and sign an agreement, determining the price you’ll pay each month, how much coverage you’ll receive and any other relevant details. As a renter, you will pay the insurance company a monthly fee. If and when an incident occurs that falls under the coverage provided by the insurance company, they will cover the cost of the property damage, legal fees, medical bills, etc.

Actual Cash Value vs. Replacement Value

Generally, there are two types of renters insurance coverage for property damage: actual cash value or the replacement value. If you have an actual cash value agreement, your insurance will cover the cost of the property when you bought it minus the depreciation. For example, if a two-year-old television is stolen from your rental property, the insurance company will pay you the equivalent of a two-year-old version of that television.

If you have replacement value coverage, your insurance will cover the cost to purchase the same or a similar item. For example, if a two-year-old television is stolen from your rental property, the insurance company would pay you the cost of a new television.

Since the payout is typically higher, the monthly cost of insurance with replacement value coverage is more expensive.

How Do I File a Claim?

When an incident occurs at a home you’re renting that you think might be covered by your renters insurance, there are a few steps you need to take. If property damage has occurred, the first thing you need to do is report the damage to your landlord. If the damage or loss was caused by theft or vandalism, you’ll also need to report it to the police as soon as possible.

Next, you’ll want to report the damage or theft to your insurance company. Some policies have a time frame in which you need to file a claim, so be sure to contact them as soon as possible. When you call, they’ll likely ask you for your policy number, when and where the damage occurred, and a rough description of what was damaged or lost. Even if you don’t have a detailed list yet, it’s important to notify your insurance company as soon as you can. You can get them a detailed list once you’ve had time to assess all the damage.

The next thing you need to do is evaluate the damage and determine the value of the items damaged. This is where your photographs and documentation comes in handy. Hopefully, you’ve already taken pictures and estimated the cost of your more high-value items. If the item is electronic, it helps to document the serial number as well.

If you don’t have any documentation, try to dig up any receipts or old photos that the items might appear in. It’s not impossible to file a claim without proper documentation, but it makes the process go more smoothly.

Is Renters Insurance Right for Me?

Is renters insurance worth it? The short answer is, yes. Renters insurance, just like any insurance, is protection. You hope you’ll never need it, but you’ll be glad you have it when you do.

When it comes to incidents like theft, natural disasters, freak accidents and injury, people tend to think it could never happen to them. However, there were over 1.4 million reported burglaries in the United States in 2017, resulting in approximately $3.4 billion in property losses. There were also over 371,000 residential fires in 2017, resulting in over $7.7 billion in property damage. When you consider the low monthly cost and the range of protection, the benefits of renters insurance greatly outweigh the downsides.

How Do I Find Rental Property Protection?

contact american heritage property management for renters insurance

Learning how to get renters insurance, how it works and if its right for you can be a challenging process. When you rent a property managed by American Heritage Property Management, we can help guide you toward the best renters insurance plan for your needs. We’ve partnered with HomeSale Insurance Services, which works for you to make sure you get the best coverage that’s tailored to your needs and budget.

At American Heritage Property Management, we want to help you find the perfect rental home and a tailored insurance plan to go with it. To browse our listings in Central Pennsylvania and Maryland, visit our website or contact us today!

Posted by: heather on December 26, 2019
Posted in: Uncategorized