Your Pocket Guide to Renters Insurance
If you rent your home or plan to rent a home in the future, you need to do some research on Renter’s Insurance. We’ll give you a start here with the basics.According to industry experts, Renter’s Insurance is one of the most under utilized forms of financial protection available on the market. However, it is becoming more important daily and, thankfully, it is quite inexpensive. The typical policy runs about $15 or $20 per month and, when researching this article, we found policies as low as $4 per month (but there are restrictions so continue to read on).
So…What is Renter’s Insurance?
Simply put…Renter’s Insurance is Stuff Protection. Whether you realize it or not, your personal belongings (furniture, clothes, electronics…) are not insured by your Landlord. This may seem to be a way of avoiding liability by the property owner but, in fact, the Landlord (nor anyone) can legally insure property that does not belong to them. Unfortunately for the Tenant, in the event of a catastrophic event (fire, hurricane,flood…), their belongings will be at risk. In today’s world, major weather events are becoming commonplace. As Property Manager’s, we have been witness to severe storm damage that resulted in thousands of dollars worth of personal property losses. For this reason alone, Renter’s Insurance has become the “new normal” in the Residential Rental Market.
But, there are many other reasons to cover yourself with Renter’s Insurance. Here are a few:
- Theft - Protect yourself against the dishonesty of others. Many items, that we take for granted and would be very difficult to replace and are quite expensive. Consider your cell phone or your computer.
- Liability - What if you, or one of your friends, tripped over a table leg and suffered an injury? You could incur thousands of dollars worth of medical bills or, worse yet, be sued by the Insurance Company of your injured friend (service professional, cleaning service)
- Temporary Lodging - In a case that requires that you seek temporary lodging due to a storm or mechanical failure that renders your premises unlivable, your Renter’s Insurance can relieve the financial burden that would result (Laundry, meals, transportation…). BUT…Most Policies do not cover earthquakes or flood damage. **As a word of warning…Insurance Companies have broadened their definition of what constitutes flood damage. Flood Plains are less relevant today. Insurance Company “floods” can happen at the top of a hill, miles from any free flowing water source (creek, river, lake, ocean…). Prolonged periods of rain, causing ground saturation, that eventually soaks through the foundation, will likely be considered a flood by the Insurance Company….even without a puddle in sight…and thus, not their problem…
Hopefully, the minimal cost of these policies, will make Renter’s Insurance an option for you. Peace of mind helps most renters accept the expense of the premium payments but there are ways to reduce the expense if you choose to narrow the coverage options within your policy.
Renter’s Insurance Policies come in two basic forms…either “All Perils” or “Named Perils”. This may be the most important question that you ask your agent. For lack of a better definition, “Perils” are the events that would constitute a “covered” loss. The standard recommendation for Residential Rental Properties is “All Perils”. Obviously, this is the most comprehensive policy. It covers the widest range of possibilities of loss. MAKE SURE, however, that you get a list of these “Perils” and consider them as it relates to your property. Ask Your Agent About Water Back Up Coverage! If there are floor drains or below grade sewage lines, this may be very important. In some cases, Riders may be included on your policy to cover additional circumstances not specifically mentioned in the original policy. The most common examples of this type of Rider, would be for jewelry and high priced electronics etc. Items, such as these, tend to be small and expensive. They are more likely to turn up “missing” and are normally easy to dispose of by an individual who may have removed them from the premises. This additional risk of loss makes these Riders more expensive than coverage amounts allocated to more typical items. Conversely, in a “Named Perils” Policy, you can reduce your cost by eliminating possible events that could result in loss. For example, if you rent a home in a high security building, maybe you could eliminate the Theft portion of your policy (and the associated cost). Perhaps, if you feel that there is no possibility of someone getting hurt in your home, you could opt out of Liability coverage. Insurance Companies have different options. Pick what’s best for you!
Don’t make the mistake that many people do, and think the owner of your apartment or the Management Company will have an insurance policy that covers you and your belongings. Fact is, their insurance will cover the physical home but not your possessions or your liability.
Most residential rentals require some form of renters coverage before the lease is signed. Most Management Companies can provide you with contacts to arrange for this coverage. It would be a good idea to factor this expense into your budget when looking for a place to live. Many providers can also help you reduce your cost by bundling your Renter’s Insurance with your Auto Policy. In the case of our company, there is a link provided on our Tenant Portal where, you can arrange for a policy (We do not participate with the Insurance Agent or profit from this service in any way). Renter’s Insurance has become a modern day necessity for anyone in leased living space, so protect yourself.