Renters Insurance – Protecting Landlords & Tenants
According to a 2014 Insurance Information Institute poll, only 37% of Renters said they carry renters insurance, while 95% of Homeowners carry homeowners insurance. Plainly said: 63% of Renters polled would have no protection to help replace their belongings following a major loss.
It’s important to understand that if you rent, the policy that your landlord carries will only cover the structure itself and his/her financial interest , but does not offer protection for your belongings. In order for you to be protected you will need a separate Renter’s Insurance policy. A Renters insurance policy provides financial protection against the loss or destruction of your possessions when you rent a house or apartment. Because in most cases, renters insurance covers only the value of your belongings (not the physical building), the premium is relatively low. When you purchase renter’s insurance, your possessions are covered against losses from fire, smoke, lightning, vandalism, theft, explosion, windstorm and water damage (not including floods). The liability portion of a renters insurance policy also covers your responsibility to other people injured at your home or elsewhere by you, a family member or your pet. It may also cover legal defense costs if you are taken to court. Renters Insurance will cover your additional living expenses if you are unable to live in your apartment because of a fire or other covered peril. Most policies will reimburse you the difference between your additional costs, and your normal living expenses but still may set limits as to the amount they will pay.
There are two types of coverage for your personal property:
1) Actual Cash Value – pays to replace your possessions, minus a deduction for depreciation, up to the limit of your policy
2) Replacement Cost – pays to replace your possessions up to the limit of your policy
Many landlords and leasing companies are now requiring their tenants to purchase renters insurance, which not only offers protection to the tenant, but to the landlord as well. The reasons are varied, but here are just a few:
1) In the event of a major loss, such as a fire, the landlord can rest assured knowing the tenant will be able to replace their belongings, and will be reimbursed for additional living expenses while the home is being repaired/rebuilt. A tenant is more likely to come back if they feel they’ve been taken care of after a loss.
2) If a tenant’s negligence causes damage to the landlord’s property, the landlord’s property insurance company can sue the tenant – even if the landlord wouldn’t normally do so. Having a renter’s policy also protects the tenant from such lawsuits.
3) If a tenant, or their pet causes a neighbor to suffer a loss, through bodily injury or property damage, the liability portion of the renters insurance will provide the necessary protection, thereby protecting the landlord from a lawsuit.
Renters policies are written with the tenant’s personal belongings and liability needs in mind. Together, you and your licensed insurance professional can decide how much or how little coverage you need. Often, you’ll find that when you package your auto insurance with a renters policy, the premium for both is only slightly more than you would pay for auto insurance alone.
Contact me today to find the policy that is right for you!