If you rent an apartment, your landlord may require you to get and maintain renter's insurance as part of the terms of your lease. Even if your landlord doesn't require it, rental coverage is often a good idea. If your property is damaged or stolen while you are renting your apartment, your renter's insurance will cover the loss. In some cases, you can save thousands of dollars in replacement costs by purchasing renter's insurance prior to an incident.
Why You Need Renter's Insurance
The most common reason people purchase renter's insurance is that it is required by their landlords. If your lease requires that you maintain insurance, coverage is then not optional. Failure to get or keep coverage may be grounds for eviction.
Landlords often require tenants to carry insurance because they don't want to be liable should a tenant lose all their properties in a fire or other catastrophic event. Even if your landlord does not require coverage, you should consider getting it. Renter's insurance gives you peace of mind. If you suffer serious losses, having coverage can also greatly reduce the financial impact of the incident.
What Rental Insurance Covers
Renter's insurance usually covers your property. In some cases, you may have to provide your insurer a list of property, its value, and all serial numbers in order to qualify for coverage. In others, all property is covered as long as you have proof of your ownership and of its value.
It's important to note that most rental insurance plans cover only your property. That means that if you share your apartment with roommates, each roommate needs to get his or her own rental insurance policy. It also means that if you share ownership of property with your roommates, you may not be entitled to the full value of the property after a loss.
Types of Rental Insurance
Standard rental insurance covers losses from fire, theft and some weather-related problems, such as damage from sleet or snow. However, standard policies may exclude certain weather-related events. Most commonly, hurricanes, earthquakes, and floods are excluded. So if you're renting property in areas such as California or Florida that are prone to these types of events, you may need to purchase supplemental insurance to protect against these types of losses.
Insurance policies also differ in terms of how they handle losses. Some policies provide the "actual cash value of your property. That means they will pay you exactly what your property is worth at the time it is damaged after a loss. Other insurance policies pay only the amount it will cost to replace the damaged property after an incident. Make sure you understand which type of payments you are entitled to when you sign your policy so you don't get any nasty surprises after filing a claim.
Most policies have an upper limit on reimbursement. If your property is very valuable, you may need high-value insurance to ensure you receive replacement costs if it is damaged or stolen.
Other Benefits
Some insurance policies offer benefits in addition to property replacement. They can cover lodging costs if your home temporarily becomes unlivable after a covered event. Liability coverage and medical expenses may also be covered if someone injures himself or herself in your apartment.
Choosing the Right Insurance Policy
When choosing a rental insurance policy, weigh your potential losses against the cost of the policy. Low deductibles, high-value insurance, and replacement cost insurance cost more because they offer you greater benefits in the event you need to make a claim. You should only choose these types of coverage if your property is more valuable than the cost of insurance.
In addition, consider how likely it is you will suffer losses. Don't purchase more insurance than you need or pay extra for coverage against unlikely events. For example, if your area is rarely hit by hurricanes, don't purchase supplemental coverage against hurricanes.
