Renter's insurance has grown increasingly popular over the years. Especially because many landlords now require renters to obtain renters insurance before they move into the property.
While it may seem that having to buy renters insurance is one more hassle for you, the opposite is really true. It makes sense for every renter to have their own insurance.
But how does renters insurance work? That's what we're here to answer.
How Does Renters Insurance Work?
Renters insurance is designed to help protect you and your belongings. While many people assume that their landlord's insurance will protect them, it won't always. Not unless you can specifically demonstrate the landlord was negligent.
So, you need renters insurance. Here's why:
- Covers cost of replacing personal items that are stolen, destroyed, or damaged
- Some policies cover legal liability if an injury occurs on the insured property
- Covers additional living expenses if your living space becomes uninhabitable
Let's break those down further.
What Does Renters Insurance Cover?
There are 3 types of insurance coverage renters insurance handles.
Personal Property
Covers replacing or repairing your personal belongings such as clothing, furniture, and electronic due to a situation such as a fire or a burglary.
What's Important to Know about Personal Property
Know your coverage limits before anything happens. The National Association of Insurance Commissioners also recommends understanding that you have two options in this case:
1. Actual Cash Value Coverage: With this type of coverage, your plan takes depreciation into account. So if your computer cost $1,500 two years ago, you'll only receive the current value of your computer.
2. Replacement Cost Coverage: This plan doesn't take depreciation into account. Rather, it replaces an item with one of a similar make and model.
Liability
This coverage helps protect you if you're found legally liable for injuries sustained by other people or any damage done to their property.
Here's where liability coverage is helpful:
- A ball goes through a neighbors window
- A guest trips in your home and injures themselves
Limits do apply. It's also important to read and understand your policy so you know exactly what it can cover should a problem arise.
Additional Living Expenses
This part of the policy brings peace of mind. Should your home become uninhabitable due to a fire or flood, this type of coverage typically pays for your hotel until you can move back in.
It also may help pay for additional food costs until you're back in your own space.
What Questions Should I Ask When Obtaining My Policy?
How does renters insurance work? It depends on the insurance company you work with. We're not all the same, and each policy is different. So you want to ask questions before you choose a policy.
Here are a few questions to help you choose the right policy:
- How can I get the most out of my renter's insurance claim?
- What information do I need to have to prove my renter's insurance claim?
- How is my claim valued?
Another great way to help yourself and your renter's insurance company are to perform a Home Inventory. This way, all your belongings are already cataloged and the process will go much more quickly and smoothly.
Amistad Insurance Services is happy to answer any and all of your renter's insurance questions. Click here for a free quote.
