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All About: Renters Insurance

By Dan Green

Renters insurance pays cash when your personal items get damaged or stolen; and protects you from paying for somebody else’s injuries that happen in your rental. Coverage is cheap and should never be skipped.

What is Renters Insurance?

Renters insurance is a special insurance policy for people who rent apartments and homes.

Renters insurance protects renters from loss and sends cash payments when:

  1. Your personal property gets stolen or damaged
  2. A guest in your home gets injured, accidentally
  3. A guest in your home causes damage to the property

Renters insurance is protection.

When you have a renters insurance policy in place, you get cash for items stolen from your home; protection from lawsuits, should someone trip and get hurt in your home; and, money to repair damage that another person causes in your place.

Renters insurance also extends beyond your home.

When you have renters insurance, your personal property is insured against theft from your car and in other public places. For example, if your laptop is stolen from a coffee shop, your renters insurance policy helps pay to replace it.

Renters insurance is a must. If you rent a home, make sure you’re covered and insured.

Click here for today’s renters insurance rates.

What Does Rental Insurance Cover?

Renters insurance protects renters from loss in two specific areas, and it does it cheaply. Renters insurance should never be overlooked or omitted.

The first area of protection provided by renters insurance is protection for your personal property.

Personal property is anything that you own and bring into your apartment. It includes your televisions and game consoles; your beds, your dressers, and furniture; plus, your clothes and anything else.

If your personal items are ever stolen in a robbery; or, if they’re damaged from natural events such as wind, fire, and lighting, your renters insurance policy makes a cash payment to you for the amount of your losses and damages.

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The second area of protection that renters insurance provides is protection from lawsuits should a guest get hurt while in your rented home, or on your rented property.

A wide range of injuries are covered, too, including a person slipping on a wet spot in the kitchen; a person tripping on a cord; and, even a person who drank too much and fell down stairs.

Protection from these types of injuries is known as personal liability insurance .

Personal liability insurance pays cash for an injured person’s medical bills; in addition to whatever costs you might have to pay related to a lawsuit.

The personal liability part of your renters insurance policy covers lawyers fees, court fees, and settlements and judgments so you don’t have to. However, because liability insurance usually caps at $500,000 of coverage, it’s a good idea to add a personal umbrella policy to your insurance for protection against major injuries and death.

A personal umbrella policy will protect you and your money from large lawsuits.

Before you say you don’t have money to protect, remember that you will earn income in the future, and the courts can garnish those wages for the rest of your life, if they want, until your lawsuits are repaid.

A personal umbrella insurance policy protects you from the garnishing of your wages.

5 Questions to Help You Shop for Renters Insurance

Every renters insurance policy is unique. Pricing is based on the size of your apartment and its address; and, the amount of stuff you want to insure.

This is why it’s smart to shop around when you’re looking for a renters insurance policy. Where you find the cheapest renters insurance will depend on what you want your insurance to cover.

Here are five questions to help you get the cheapest renters insurance you can.

1. If something goes wrong in your rental, how much could you pay for the damage?

When something goes wrong in a home, it can be expensive. A broken water pipe can ruin a closet’s worth of clothes; and, a fire in the kitchen can spread throughout a home.

A renter that makes a claim for these damages, though, won’t get all the money requested. The insurance company will send the money requested — minus some amount of cash.

This cash that’s withheld by the insurance company is what’s called a deductible .

Deductible sizes can be customized. Typically, you can choose from between $250, $500, or $1,000. The larger your deductible, the less you’ll pay for your renters insurance.

If you are comfortable paying $1,000 when your wardrobe is ruined by water; or, when your furniture catches fire and needs replacement, choose a high deductible. Otherwise, opt for a small deductible.

With a small deductible on your renters insurance policy, you’ll pay more money for your policy, but you’ll get more cash should something ever go wrong.

2. Do you have a lot of electronics to insure?

The amount you pay for renters insurance might depend on the types of electronics you keep in your home.

Electronics go obsolete pretty quickly nowadays, and insurance companies know it. If you’re insuring a lot of computers, televisions, and devices, then, save money on renters insurance by insuring your items for their actual cash value which, over time, drops pretty fast.

This means that insurance companies will pay you less to replace your television in the future than it pays today, which lets them lower the cost of their policies to you.

The opposite of an actual cash value policy is replacement coverage . Replacement coverage pays out the full price to replace the item with “this year’s model”.

Replacement Coverage is more expensive as compared to actual cash value coverage.

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3. Do you own expensive things?

Renters insurance policies protect your personal items from damage and theft. Depending on what you own and your possessions, though, you may find that your policy’s built-in coverage for personal items is not enough.

If you have a high-value art collection or a large collection of jewelry, as examples, the standard coverage provided by your renters insurance may be too low to fully replace your items of value.

Instead, have your insurance company raise your personal property coverage to a suitable amount.

Raising the amount of your personal property coverage on your renters insurance will raise your insurance premium slightly. The extra coverage, though, is necessary and important.

4. Do you drive a car?

Insurance companies like to give discounts to customers who have two or more active insurance policies at a time. If you drive a car, then, use your auto insurance policy to help you get you a discount on your renters insurance.

This is known as bundling .

Just note that the cheapest car insurance companies aren’t always the ones with the cheapest renters insurance quotes, so be sure to shop around. Compare at least three quotes and offers.

Bundling insurance can save you 25% on your costs.

Click to check bundled insurance rates.

5. Is this apartment in a flood zone?

Flooding is the most expensive and most common natural disaster in the United States. It’s also not covered by a standard renters insurance policy.

If your rented home is in a flood zone, consider flood insurance to protect your personal property. Although your renters insurance policy protects against water damage in the home, its coverage does not extend to damage from a flood.

Also, if you’re not in a flood zone, think about adding flood insurance regardless. More than one-fifth of all U.S. flood damage occurs in areas with low-to-moderate flood risk.

Shopping for Renters Insurance

Shopping for renters insurance is quick and simple. You can talk to an insurance agent by phone, or shop for rates online anytime.

Renters insurance rates will vary by company. Check with at least three insurers to make sure you’re getting a price you like — especially if you’re planning to bundle your auto insurance and renters insurance together.

Click to compare renters insurance rates.

Written by Dan Green

Dan Green is a mortgage lending expert and the founder of Growella. Prior to Growella, Dan was a six-time, top-producing loan officer; and, ranked repeatedly among the top 1% of loan officers nationwide. Dan's home buying expertise has been in print and on TV with The Wall Street Journal, NPR, Forbes, CNBC, and others.

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