renters insurance

Am I Required to Have Renters Insurance?

Renters insurance protects renters and their belongings against certain risks such as theft, vandalism, personal liability, and other insured risks. Though rental insurance helps to protect your personal belongings and you from liability, it is not required by law. However, your landlord or the management company may require you to purchase renters insurance as part of the terms of the lease agreement. Your landlord may require you to have renters insurance due to various reasons.

First, renters insurance lowers their liability. In case someone gets injured at your home and you do not have insurance, they may seek compensation from the landlord. Renters insurance helps to prevent the likelihood of this. Renters insurance also prevents landlords from replacing your personal belongings in the event of a disaster. Though renters insurance is not required by law, it makes sense to purchase one in order to protect yourself from unforeseen damages.

How Renters Insurance Works

Also known as apartment insurance, renters insurance serves as protection for your personal property from insured risks. There are two basic forms of renters insurance: actual cash value and replacement cost value. Actual cash value policies are cheaper than replacement cost policies. This type of renters insurance does not reimburse the full amount to replace damaged or stolen items. Rather, the insurer considers the age and condition of the item when calculating the reimbursement. This means the final payout will be reduced by the deductible and depreciation.

Replacement cost value policies cover the actual cost to replace damaged or stolen items. These rental policies reimburse the damages if the item were to be bought new. However, replacement cost value policies are more expensive than actual cash value policies. Renters insurance covers damages from theft, vandalism, windstorm, fire, hail, car impact, etc. You cannot get coverage for floods and earthquakes under renters insurance. Basically, renters insurance includes the following coverages:

Personal Property

Renters insurance includes personal property coverage. If your property gets damaged or stolen as a result of fire, wind, hail, theft, vandalism, or other insured events, your insurer will reimburse you for a replacement.

Liability Coverage

In a situation where you are legally responsible for injuries to another party on your property, renters insurance may prevent you from paying the costs out of pocket through the liability coverage. Liability coverage covers the cost of repairs, replacement, or compensation.

Additional Living Expenses

If you have to move out of your rental apartment due to a covered event, such as a fire or wind damage, this coverage may help to cover some additional costs such as hotel bills and other associated costs.

Renters insurance may also cover other events, depending on the insurer. It is important to note that renters insurance coverages have limits. Your insurer will not cover you above the limits stated on your policy. For more information, visit All Things Insurance.