Three types of renters insurance you need

You might not see the need for renters insurance if your landlord doesn’t require you to have it. Or you might not have even heard of renters insurance at all. And you’re not the only one. A research study in 2016 found that less than half of all renters in the United States insure their homes.

If you’re dragging your feet on acquiring renters insurance, you’re definitely missing out on valuable protection for your personal belongings. Renters insurance coverage is often paid in monthly payments – starting at around $14 and going up – so most renters can afford to insure their belongings and personal property in case of events like theft or damage.

A full policy includes three types of renters insurance for complete coverage: personal property coverage, liability coverage and additional living expenses/loss-of-use coverage. Each provides specific coverage for certain items and in the case of certain events. When you do decide to purchase renters insurance, be certain that you have all three types of coverage included in your renters insurance policy. 

Personal property coverage

When you look around your apartment, you’ll see items that you use every day. Your laptop sitting by the couch, the new wall art you put up, and your new jacket. These are all of the items that you’ll want protected with personal property coverage, the items that make up your everyday life. This type of renters insurance covers your personal property, including items like electronics, expensive clothing, and furniture. 

Here’s where it might get a little tricky when you’re deciphering your renters insurance policy. There are two types of  personal property coverage, and certain items you own may be covered by one or the other depending on what type of item it is. 

For example, actual cash value is coverage that factors in your personal property’s depreciation. This is when an insurance company factors in an item’s age and condition into account when they calculate the amount of money you’ll be reimbursed for your file a claim, like an iPhone 7 will have less value than an iPhone 12 when it is paid to you for a claim today. 

Replacement costs coverage does not take depreciation into account. When replacing those items, you will be reimbursed the full amount you paid for them, ​​no matter how much time has passed. Most insurance companies often treat actual cash value coverage as a standard and replacement costs policies as additional coverage. 

When it comes to covering your personal property, keep a home inventory of your important items at the time of your policy start. This way, you’ll save time and energy later on dealing with a potential emergency. You can make this a living document on your notes or document app connected to your email, so it can be easily updated with new purchases and accessed from your email account. Within your policy, you can find your coverage limits and minimum deductibles for personal belongings on a declarations page.

Most policies have a maximum “cap,” the amount of money that companies are willing to pay out, varied based on the category of item, but you can add additional coverage to a category (e.g. property damage vs. electronic collectibles) by increasing your monthly policy payment.

Liability coverage

Cooking a new recipe with your friend might seem like an exciting night, but if they accidentally burn their hand or you misuse a knife, you’ll want to have liability coverage. Liability protection is for a bodily injury that occurs in a policyholder’s rental home, whether the incident impacts you or a visitor. In the event that any visitors hurt themselves in your home and decide to file a lawsuit against you, this insurance will pay for your legal bills and court costs up to your policy limit. Take note – liability coverage does not necessarily pay for all of another person’s medical bills, so make sure to read the fine print for all covered perils and any exclusions before agreeing to a renters insurance quote.

Additional living expenses/loss-of-use

This coverage is in the case that you’d be forced to leave your home/your rental property becomes uninhabitable due to severe weather or other conditions. Loss-of-Use policies will pay for hotel bills and other covered loss (like gas money and groceries). These policies can range anywhere from $1,000 to $200,000 in their amount of coverage, but in cities where hotel rooms and emergency housing can cost more money, it’s suggested to increase your claim limit. 

Basic policies can start at $20,000 in personal property coverage and $100,000 in liability coverage. These insurance policies can cover your losses in the case of: 

• Fire

• Theft

• Weather related damages

• Electric damages as well as other things that make your home uninhabitable. 

It’s also very important to note what is not covered in your renters insurance such as:

•  Certain weather-related events deemed “acts of God” (floods and earthquakes)

• Sewage backups

• Damage to unusually valuable items, such as certain musical instruments

• Floods are covered within a separate flood insurance by most insurance providers

Once you have an idea of what different types of coverage renters insurance companies can avail, you’re better able to assess your insurance needs and begin the process of making sure that a provider’s policy covers you to the best of your abilities. While we don’t want a natural disaster ruining your apartment, we want you to get a bang for your buck! Here at Rhino you can find useful information on how to get the renter’s insurance that works best for you.

Larenz Brown

Larenz Brown is a copywriter at Rhino who wants to tell stories that empower people. He once engaged in a 365-day staredown with a security deposit and emerged victorious.