Renting a home or apartment is a sensible choice for many people. With rising home prices and tighter lending restrictions, renting is an increasingly popular way to pay for housing. Although renting can be cheaper than buying because it eliminates expenses such as property taxes and homeowners insurance, it is important for renters to keep in mind that the landlord is not responsible if your personal possessions become damaged during certain types of incidents. This is why we have listed important factors to consider when buying renters insurance.
Renters insurance provides valuable protection, but many renters are not taking advantage of this useful offering. According to Rental Housing Journal, only 41 percent of renters have rental insurance. This is a significant contrast to the 95 percent of homeowners who have homeowners insurance policies. Insurance experts believe this may be due to renters underestimating the affordability and value of renters insurance.
What Is Renters Insurance?
A renters insurance policy is a group of insurance coverages that offers comprehensive protection to those who are renting an apartment or home. It typically offers coverage to protect the renter, their belongings, and any living arrangements that may be needed following a covered loss.
Although some people believe that only those who have expensive possessions need to take out renters insurance, it is important to keep in mind that the cost of replacing even the smallest and most inexpensive items, such as linens and cookware, could add up rather quickly to a substantial amount of money in the event that an apartment or dwelling sustains serious damage.
Considerations When Choosing Renters Insurance
Outlined below is a look at the most important factors to consider when buying renters insurance.
The Right Amount Of Coverage
Renters insurance covers the cost of replacing a person’s belongings if they are lost due to theft, natural disaster, or an accident. Therefore, it is essential for renters to know precisely how much their belongings are worth before choosing a policy amount. This can be achieved by performing a complete inventory of your possessions, including the type of item, when it was purchased, how much it cost, and how much it may be worth now. This can serve as a good estimate for how much coverage is needed.
In addition to getting a more accurate picture of the value of your possessions, having an inventory list complete with photographs can be useful in the event that you need to file a claim as it will help to prove the value of your belongings. If you have any expensive items that have serial numbers, be sure to write these down as it can help to verify the claim. Be sure to keep copies of the inventory in a location outside of the apartment, such as a safety deposit box or in a remote storage system such as cloud storage, so that these documents are not destroyed along with your other belongings if something happens to your dwelling.
Items That Are Covered
Most renters insurance has three coverage components. These are personal possessions, liability, and additional living expenses.
Personal possessions include all of the contents of the rented dwelling, which will be covered for specific perils. These typically include theft, fire, electrical or plumbing malfunctions, vandalism, and some types of weather-related damage. It may also cover losses stemming from certain events, such as damage caused by vehicles or aircraft, explosions, riots, or hail.
Liability coverage is another component of renters insurance, and it offers protection up to a certain amount in the event that a renter is sued for an injury or other damage incurred at their home by another person. This will also pay for damage caused by you, a family member, or a pet to other people. It will pay for any court judgments and legal expenses up to the policy limit.
The additional living expenses component of renters insurance means that should your apartment become uninhabitable because of a covered peril, you will receive money to help cover any temporary housing that is needed until your dwelling is restored. It may cover expenses such as temporary rentals, hotel bills, and restaurant meals during the time that you cannot live in your home.
The Type Of Coverage Needed
There are two main types of renters insurance available. The first is an Actual Cash Value (ACV) policy. This will take into account factors such as everyday use and appreciation in determining the value of any damaged property. This policy tends to have lower premiums, but will not provide as much reimbursement as a Replacement Value (RV) policy when the time comes to file a claim.
With an RV policy, on the other hand, wear and tear and appreciation are not factors that are used to determine the value of an item. Instead, the insurance company will pay the claim according to the amount of money it would cost to purchase a similar item at the current market value. Although this type of policy will cost more money up front, it can be worth it for renters who possess expensive items.
Another factor to consider when buying renters insurance is the amount of deductible that the policy carries. This is the amount of money that must be paid out-of-pocket before the insurance company will start providing compensation. The deductible options for a renters policy could range from $200 to $1,000, depending on the insurance company.
Many people prefer policies with lower deductibles because it means they will not have to pay as much money when they file a claim, but this is not always the best choice. Opting for a higher deductible may mean that you have to pay more money up front should something happen to your possessions, but the monthly premiums will be lower, and this could amount to more savings in the long run – potentially enough to offset the expenses if a claim ends up being filed.
Raising a deductible from $500 to $1,000 could lead to a reduction of as much as 25 percent in your premium, depending on the insurance policy and provider. However, those who do go with a higher deductible should make sure that they have enough money set aside in an emergency fund in case they need to pay their deductible at some point.
It may be useful to consider how much money you could afford to spend to replace your possessions if a major loss occurred and then insure yourself for the difference.
Exceptions To Coverage
Renters insurance is fairly comprehensive and covers a broad range of circumstances, but it is important to keep in mind that there may be some situations where a renter will not be able to file a claim. For example, some policies may not provide coverage for damage that is caused by a flood or earthquake. If that is the case, it may still be possible to purchase separate policies to provide coverage in these events, depending on the insurer.
Other things that may not be covered include the backup of sewage into the residence and certain “acts of God.” Therefore, it is important to ask an insurance agent for a full explanation of what each policy covers and does not cover in order to make a more informed choice when shopping for a policy.
Keep in mind that if you have any items that are valuable, such as fine jewelry, an art or antique collection, electronic equipment, or musical instruments, it may be necessary to purchase floater insurance as a rider to provide specific coverage for these items. Renters should discuss this with their insurance agent to ensure proper coverage is in place.
Paying For The Policy
You should also consider how you are going to pay for your policy. Compared to homeowners insurance, renters insurance is generally relatively affordable, but rates do vary depending on the state, the insurance company, and the amount of insurance that is purchased as well as the deductible.
Renters insurance may offer a significant discount to those who take steps to reduce their risks, such as installing fire or burglar alarms, sprinkler systems, or deadbolt locks in the home. It is also worth noting that insurance is often cheaper when you pay the premium for a full year rather than opting for installments. Therefore, if you have enough money available to pay for the year upfront, you could enjoy significant savings.
The Insurance Company
Although renters insurance policies are generally affordable, it is still worthwhile to spend some time choosing an insurance company carefully. When you are considering buying renters insurance look for a company that provides good service and makes you feel valued. You may ask friends and family members for recommendations or research the options available in your area online and look for reviews.
Although some experts suggest getting quotes from at least three companies, keep in mind that price should not be the only factor you consider when selecting a company. It is also important to look at their reputation and experience.
Request A Renters Insurance Quote From Southern States Insurance
Whether you are a new renter or an experienced one, you need to think about how you can protect yourself financially if something happens to your rental unit or personal possessions. Reach out to the insurance professionals at Southern States Insurance to find out more about how our comprehensive renters insurance coverage can protect your belongings at an affordable price. Serving the Southeast since 1992, we have access to most major insurance carriers and can find you the best coverage to suit your budget.