Your landlord or leasing company says you have to have renters insurance, why?
I hear this question a lot from my clients: “If I don’t want to cover my belongings why am I required to carry renters insurance?”.
The reason is, renters policies includes more than just coverage for your “stuff”. Every carrier includes slight variations, but just like homeowners insurance, it has some basic coverages that are typically on all policies. Here are the most common coverages and a brief description:
- Personal Property- This is the coverage for your “stuff”. Anything that is moved in by you and not attached to the home (built in items are not covered by this!). Most people carry anywhere from $5,000 up to $100,000 for a listed amount and it all depends on what your comfort level is based on what you own. One great thing to note it there is usually a 10% extension of coverage for property off premise. In other words if your bike, purse or other valuables, get stolen while you’re out and about your renters can help you pay for what is taken. it also covers damage from fire, water(with some conditions), and a few other named perils. Always ask questions on this coverage and make sure it lines up with your needs, many companies just stick a random figure on this and call it good when you sign up.
- Loss of Use- This covers the additional cost it would take to live somewhere else if you can’t live in your rented place. This happens a lot when there is a fire, water damage, or other major weather issue and you have to move out. This coverage will help you pay to live in a hotel or other residence while the damage is being repaired. There are some limitations to this coverage and the loss has to be a covered type (i.e. fire, theft, lightning) but it comes in really handy in those situations. A basic amount is almost always included on your policy so removing it or reducing it won’t usually save you any money.
- Personal Liability- This is the coverage your landlord or leasing company is looking for. This makes sure they are shielded from legal liability should you be sued for injury or property damage. This coverage pays for the legal cost of a lawsuit against you no matter where in the world it happens. Most policies come with $100,000 in coverage but I always recommend bumping that up to $300,000 or more, as the cost for it is usually very minimal. The reason your required to have this is anything that happens in your rented dwelling can trickle up to the person who owns it. If someone falls off your balcony and is injured severely, not only with they usually sue you for the damages, they will go after the property owner and anyone else they think might be liable. This coverage is glanced over quite often but in my opinion it is the most important part of a renters policy.
- Guest Medical Payments- This is also sometimes called “don’t sue me” coverage. Essentially it is a medical payment you can use to pay the medical bill for someone who is injured on your property. They have to be a guest so Family is not included in this coverage! I always use the example of the mailman slipping on your driveway or entryway. Here in Colorado we get plenty of snow and if you don’t clear your walkways and salt the ice, you can be held responsible for people slipping. In my mind this is a little ridiculous, people should be responsible for their own moments of stupidity, but it’s a product of the age we live in. If this happened you could claim your medical payments to pay for the mailman to visit the ER and get checked out. The payments usually are not much, about $1,000 on average, but it can be the difference in the mailman suing you or not. If someone is hurt it’s always a good idea to call your insurance carrier and ask about, but remember use hypothetical terms until you’re sure you want to open a claim.
Now for the stuff the usually don’t tell you about.
Along with the basic coverages you can also add all kinds of other things. The ones I always bring up are special property, such as jewelry and firearms, along with building additions and glass. Renters and homeowners insurance almost always has a set limit of payouts on Jewelry, firearms, and collectibles. If you have some of these things that are fairly valuable (over $1,000) I highly recommend chatting with your company or agent about adding some extra coverage for them.
Also if you are building in anything in your rented space such as shelves, cabinetry, work benches or custom features, they will not be covered by your personal property coverage. Again it’s always good to ask about these things and make sure you know you have them on your policy if you want them insured.
Lastly a very common claim for renters to ask about is for a broken window. This can happen from all kinds of accidents, from having a party that got a little wild to a windstorm blowing a tree branch into the glass. If you have a lot of exposed windows definitely ask about this, it may only cost a dollar or two and month and it is well worth it when something like this happens. If it was a wild party you may not want to tell your landlord all the details though.
Renters insurance is one of the most commonly misunderstood and ignored policies out there so use this information to be smarter about purchasing the coverage right for you. It may be required in some cases but even when it isn’t I recommend taking a look at the cost. Most policies are between $15 and $30 per month and a lot of times you will get a discount on your other insurance if you bundle with one company.
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