Insurance must be a serious consideration for any tenant or landlord. However, many think about renters’ insurance and assume it’s costly, inconvenient, or unneeded. In reality, most plans cost less than buying one large specialty coffee a week or eating out for lunch once a month. Also, they’re pretty broad and cover damage ranging from theft and fire to accidents.
Your landlord most likely requires you to already have renter’s insurance, or will ask you to purchase a plan they endorse before moving in. Renters’ insurance protects you in case of disaster, like burglaries, natural disasters, or fires. Not to mention, having an insurance plan gives you a piece of mind when worrying about any of these unforeseen circumstances.
But what exactly is renters’ insurance? There are three types of coverage: belongings, liability, and loss of use. We will dive into each of these types and why they benefit you.
Personal property and belongings are electronics, furniture, clothing, and other items that you may have in your property. These objects typically require a deductible and are subject to limits. Your landlord may encourage you to take stock of your personal property prior to moving in and take a moment to thoughtfully decide on an appropriate coverage limit. This aspect is straightforward—in the case of a flood or burglary, your personal items are covered.
This coverage comes into play when things go awry, and you damage the property or cause an injury to someone else while there. Most policies will cover $100,000 worth of personal liability, and you have the option to purchase additional coverage as needed. Many renters’ insurance policies cover basic liability, but be sure to read through your policy closely to understand exactly what’s covered. Sometimes, your policy could require endorsements or riders to add more extensive coverage.
Personal liability coverage can cover lawsuits brought against you for damages of any kind, whether it be due to bodily injury or property damage. This money can cover the medical bills of the injured person, or the repairs needed for any damage done to the home. It also could pay for legal fees from any resulting lawsuits of the incident.
Loss of Use/Living Expenses
In the case of a tornado, flood, or anything resulting in your home becoming uninhabitable, the loss of use aspect of renters’ insurance will come in handy. The loss of use/living expenses insurance covers any additional costs that may occur while being displaced: this can include hotel fees, the cost of doing laundry off-site, or eating out at restaurants. Additional living expense (ALE) insurance does not cover damage to belongings or your home, as this is covered in the other parts of your plan. However, it does cover any additional expenses. An assessment of your current rate of spending and what you’re spending after having been displaced will take place when filing a claim, so when doing so, it can be helpful to use an additional living expenses worksheet.
When filling out an ALE worksheet, break your living expenses down into categories such as housing, meals, transportation, utilities, and miscellaneous (this is where other things like laundry costs will go). Under each of these headings, write out individual expenses. Utilities would include water or electric bills, and meals would include grocery costs. Note both what you usually pay for that expense and what you pay now that you are no longer able to be in your home.
Make sure that you are only including expenses that have resulted from displacement. ALE insurance will not cover your mortgage or a movie night.
Renter’s insurance protects you from the things you aren’t expecting. Your policy is the first thing to kick in in the case of an accident and will be the one dealing with your landlord’s insurance company, saving you the hassle.
If your landlord offers a property management software for things like rent collection or filing maintenance requests, you may have the option to purchase insurance through this platform. Purchasing renters’ insurance has never been easier: with platforms like Innago, purchasing a renters’ insurance plan is as simple as answering 10-12 questions and a few clicks of your mouse.
All in all, renters’ insurance is inexpensive, comprehensive, and easy to purchase. There should be nothing stopping you from doing what’s best for you during your time as a tenant.