What Does Renters Insurance Cover?

There are three types of rental insurance coverages available on most policies. As a renter, you will receive coverage with each of them up to the limits laid out in the plan you choose. These three coverages include Personal Property, Liability, and Additional Living Expenses.

Personal Property Coverage

Personal Property Coverage is essential coverage for all renters. It covers the cost to replace or repair all your belongings, including furniture, clothing, electronics, appliances, and more. It covers damages from break-ins, theft, fire, and storms as well. Personal property coverage extends to items stolen from vehicles and buildings on the property.

The amount of coverage you need depends on the value of the items you own. To determine the correct amount of coverage, you can inventory all your personal belongings and specify their replacement value. That will give you a good idea of how much coverage you should purchase. You can then determine to get either an ACV (actual cash value) or Replacement Cost Policy.

Actual Cash Value policies take the replacement cost of your items and deduct depreciation to determine how much your payout will be. Deductibles and premiums are generally lower, but you run the risk of not receiving enough compensation to cover the cost of all your items.

Replacement Cost Policies cover the cost of replacements without factoring in depreciation. You will receive the current market value for your items which may be more than when you purchased them initially. With this type of policy, you will have higher premiums and a higher deductible, but the extra cost may be worth it if you ever have to file a claim.

If you have high-value items like jewellery, you may want to add Scheduled Personal Property coverage to cover the additional cost of items not covered with your Personal Property Coverage alone.

Liability Coverage

If you have guests on your property, you can use liability coverage to ensure you are not liable for damage to their personal property or their medical bills if they receive an injury on the premises. If you are legally responsible for their damages or injury, it also covers you from paying out of pocket.

Additional Living Expenses

If you find yourself displaced from your home due to fire, water damage, or any other reason, having Additional Living Expense Coverage can be incredibly helpful. As its name states, it covers additional expenses associated with not living in your home and can include hotel, food, or other living costs.

Who Needs Renters Insurance? 

If you are renting, whether it is an apartment, condo, or a house, having renters insurance is imperative. The landlord will often not allow a tenant to move in unless they can show proof of insurance. Even if you think you don’t have enough personal property to warrant purchasing insurance, knowing you are protected should someone else receive an injury on the property is enough of a reason to obtain coverage.

If you cannot afford a high monthly premium, you can choose to have a higher deductible. The higher the deductible, the lower the premium. Although a good option for those who do not want to or can’t afford a high payment each month, it may be problematic when filing a claim.

Renters insurance is something every renter should have, whether they’re renting a large home or a small apartment. There are three coverages available, Personal Property, Liability, and Additional Living Expense, to ensure the renter has protection from damages or injury. Each policy has a deductible and monthly premium determined by the policy the renter chooses. The policy also determines whether the renter receives the actual cash value or replacement cost of the damaged items. Whichever plan you choose, having renters insurance is essential to protect you and your personal property.