Renters Insurance Guide

What would you do if you drove home to find your apartment building in flames, taking your brand new smart TV, $700 camera, furniture, and diamond earrings with it?

Or if a band of burglars decides that what’s yours is theirs, pilfering your most treasured belongings?

Hopefully, you’d cash in on your insurance policy and start replacing them.

But the reality is, a lot of renters don’t have a policy to fall back on because they assume they’ll be safe from the financial repercussions of impending catastrophes.

While you aren’t responsible for covering damages to the building itself (the owner is), you’ll be left at a loss on all of your possessions.

Queue renters insurance, with policies tailor-made for the perils facing renters like you.

Read on for everything you need to know to start shopping for renters insurance and get quotes on policies today!

Why You Need Renters Insurance

Before we go any further, know that if you’re renting a house, apartment, condo, pool house, shack, or dwelling of any sort, you need to purchase renters insurance.

No ifs, ands, or buts.

Let’s take a look at some of the reasons why:

  • Renters insurance is cheap. In fact, it’s one of the most affordable types of insurance on the market. For less than the price you pay to stream on your Netflix or Spotify every month, you could be insuring thousands of dollars of your possessions.
  • Renters insurance protects you from liability. We’ll talk more about this point later, but basically, renters insurance covers you if someone gets hurt at your home. That coverage includes medical bills and, though we hope there aren’t legal repercussions, it offsets those costs as well.
  • Renters insurance protects your possessions. The most obvious reason to purchase renters insurance is protecting what’s yours. Remember, your landlord’s coverage is 100% separate from your personal property. So is your roommate’s. Only you can cover your personal property. Don’t leave it unprotected!
  • Renters insurance covers damage. If you do some damage (unintentionally) in your apartment that leads to items needing replacement or repair, renters insurance has you covered.
  • Renters insurance might be required. While there might not be a legal requirement across the board for renters insurance, it’s becoming pretty common for landlords to require you to purchase home insurance when you sign the lease.
  • Renters insurance is worth it, even if you don’t think your property is. You’re probably taking mental stock of your possessions as you read. And if so, you may be telling yourself your belongings aren’t worth replacing. Let’s go back to the fire analogy from earlier.

Maybe you don’t have diamonds or a 60” TV to protect.

But what do you have?

Fires, tornados and the like are merciless, and you could be left with nothing to your name if one finds its way to your apartment or house.

Now take a closer look at that inventory of yours.

If you plug in every piece of furniture, each appliance, and all the clothes and shoes in your closet, the price adds up quickly.

What You Need to Know About Renters Insurance

There are a lot of factors to consider as you decide on the best renters insurance policy for you.

Renters and homeowners insurance come with their own vocabulary, one you’ll need to know in order to start shopping for renters insurance.

Let’s start by unpacking some key renters insurance terms.

Key Terms

Actual cash value: Amount your policy will pay to replace your items, which subtracts a dollar amount for the item’s depreciation over time.

Additional living expenses: Portion of the policy which covers your living expenses if your rental home is unsuitable to live in (during repairs after a storm, fire, etc.)

Appraisal: Your insurer’s assessment of damages or losses, used to determine the cash or replacement value you will receive.

Claim: Your request to the insurance company for an appraisal and reimbursement of a loss covered by your policy.

Contents coverage: Limited portion of a renters insurance policy designed to cover items regardless of their location at the time of the incident.

Deductible: The predetermined amount you agree to pay for your lost or damaged possessions before your insurance policy pays out.

Depreciation: A decrease in the value of your home or belongings from the wear and tear of time, everyday use, and changes to the market.

Endorsement: A document amending your coverage to reflect add-ons or legal limits to your policy.

Exclusion: Peril or item which is excluded from your policy’s coverage.

Floater: Additional protection on individual items whose worth exceeds your policy.

Liability coverage: Protects you from medical or legal repercussions when someone is injured at your home.

Peril: Risks to your property named in the policy, like fire, windstorms, and hail.

Replacement cost: Cost to replace your item with a comparable one in today’s market, with no consideration of depreciation.

What Renters Insurance Covers

With those working terms in mind, let’s take a look at the insurance itself.

Here’s what you can expect to be covered in your renters insurance policy:

  • Personal property. As previously mentioned, items like your furniture, clothes, jewelry, and electronics are covered up to a certain amount if they’re stolen or damaged.
  • Theft- here, there, and everywhere. Contents coverage is really convenient, protecting the items insured in your policy wherever you are.
  • Additional living expenses. Your lodging, relocation, meals, and other living expenses while your rental is unlivable are covered.
  • Liability. If someone breaks their arm at your apartment or has an unfortunate run-in with your dog’s teeth, you could be held responsible for their lost wages, doctor bills, and legal actions. Renters insurance protects you from those costs.

Renters insurance also covers 16 specific perils.

If you’re familiar with homeowners insurance, they’re the same 16 perils you’re covered for with a standard named plan like an HO-2, which are as follows:

  • Fire or lightning
  • Hail or wind storm
  • Smoke damage
  • Volcanic eruption
  • Explosions
  • Theft
  • Vandalism
  • Riots
  • Damage done by a vehicle
  • Damage done by an aircraft
  • Falling objects
  • Weight from ice or snow
  • Accidental flooding
  • Sudden or accidental electrical damage
  • Water damage from AC or heating issues
  • Water heater or similar pipe damage (burning, etc.)

Again, your protection applies to replacing items damaged or lost due to these perils, not to repairing or rebuilding the property you’re renting.

Additional Coverages

Depending on your situation, you may want to add some additional coverage to your renters insurance policy.

Umbrella policies: Umbrella policies are extensions to coverage which are applied to both your renters and auto insurance.

If you fear you’ll need more liability coverage than what a standard policy offers (they usually cap off around $500k), an umbrella policy is worth considering.

They protect you from a number of legal risks and also from damages to people’s health or personal property attributed to you.

Endorsements: While hail storms, tornadoes, lightning, and ice might be covered by standard policies, forces of nature like floods and earthquakes are not.

If the space you’re renting happens to be situated in a high-risk area, you might want to consider adding on coverage for those events.

While those endorsements might not be as critical for you as for a homeowner, your stuff could still be damaged by a high powered storm.

Floaters: If you have specific individual items like expensive jewelry, art, or electronic devices which are worth more than what your policy covers, you can get a personal property floater to insure them.

In some cases, your floater item will have its own separate policy, but insurers often raise your premium and allow you to combine it with your original plan.

Homeowners: This isn’t technically something you, the renter will buy, but if you’re the homeowner browsing this article and need some updated information on home insurance we can cover you on that too.

How to Buy Renters Insurance Like a Pro

You now know that purchasing renters insurance is imperative and have an understanding of what policies generally cover.

What’s next?

Read on for resources to help guide your insurance shopping endeavors.

Take Inventory

Before you go any further, take stock of your belongings.

Knowing what items you plan to insure is helpful as you start shopping and vital once you purchase your policy.

Before your needs can be assessed and your premiums established, you’ll have to provide evidence of your possessions and their value.

You can build out an inventory yourself, or use an app to simplify the process.

Apps like DreamVault, Encircle, and Sortly help you manage your home inventory with ease.

Sortly, for instance, lets you snap and log photos of your possessions, note their price and other details, and scan barcodes.

Check them out as you start to take stock of your property!

Do Your Homework

Once you’ve taken inventory of your belongings, it’s time to start shopping.
With a little careful preparation, you could be on your way to savings and success with a policy that fits your unique insurance needs.

Here’s how:

Study your policy.

  • Before you buy a policy, be sure you understand what’s covered and what isn’t. Know which perils you’re protected from, which ones are excluded, and what the limits of your policy are.
  • Read up on the claims process with each policy you consider. Find out how long the appraisal process takes, when you’ll receive your check, and how much your deductibles will be.
  • Know whether your policy will pay an actual cash value or replacement value. The payment assessment method will affect your premiums and how much you’re given to replace your belongings.

Shop renters insurance quotes.

  • Shopping for renters insurance quotes is one of the quickest and easiest ways to save money. In just a few moments, you could have quotes on the best rates on premiums from top competitors.
  • Don’t skip out on getting quotes. While the coverage might be the same on a lot of policies, you could save a ton on premiums by knowing your options.
  • Weigh all your options. Many renters insurance providers offer significant discounts when you bundle your home and auto coverage. You can also lower your premium rates by increasing your deductible amount. Plug in different numbers and scenarios to find the best policy for you.
  • Use an app like Cover, where you take a picture of the item you want insured from within the app and get quotes on it in moments.

Streamline the Process

Not only can you use apps to simplify the inventory process, but also to purchase and manage your renters insurance.

Gone are the days of printing and scanning documents to submit to the insurance company.

Now you can file your claims in a few clicks!

Lemonade

If you haven’t heard of Lemonade, you’re in for a sweet treat.

The app-based insurance provider’s tagline, “Instant everything. Killer Prices. Big Heart.” summarizes its operations to a T.

Lemonade claims to get you insured in as little as 90 seconds and paid in 3 minutes.

How?

The company’s interface creates a customized insurance plan for you based on the info you enter.

Lemonade offers some insurance rates for as low as $5 a month and will switch you over from your current insurance provider, unburdening you from a frustrating phone call.

It’s an option well worth your while.

Quilt

You also might want to look into Quilt, a site which provides the same kind of quick, simplified coverage and claims process as Lemonade.

While the startup isn’t available in the app store just yet, their website provides a stellar user experience comparable to Lemonade’s, stating you can make your claim as quickly as you’re able to type it.

Trov

Trov is another savvy provider new to the renters insurance market.

Like Lemonade, Trov is optimized for mobile, allowing you to purchase your insurance, file claims, and manage your policy through the app.

As a new startup, Trov is in the process of rolling its services out in the US, now offering on-demand coverage in Arizona and nearing regulator approval across the country.

Trov’s website allows you to click through an interactive map to stay up to date with your state’s coverage availability and get notified when anything changes.

Allstate Mobile

Popular comprehensive insurance providers are streamlining their interaction with customers as well.

Allstate Mobile provides its customers with 24/7 access to agents, a simplified claims feature, and policy management tools.

Whatever company you choose to purchase your renters insurance through, check to see if they have an app.

It can make managing your renters insurance a breeze!

Bottom Line

You probably didn’t walk into your new apartment expecting the worst, but life can change drastically in a heartbeat.

If and when mayhem ensues, your landlord is covered.

Are you?

Put your newfound knowledge to work and protect the belongings you love today.

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About Jeff Root

is the owner of rootfin.com. He's an independent life insurance agent who has helped 1,000's of consumers purchase life insurance online and over the phone.

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