If you rent your home, much of the responsibility of maintaining the dwelling falls to your landlord, including insurance for the structure itself. But a landlord’s insurance doesn’t extend to a renter’s personal belongings. If disaster struck your home — such as a fire or storm — the landlord’s insurance would pay for building repairs, but if you want coverage for your possessions, you’ll want renters insurance.
It also makes sense to have insurance that will protect your possessions in the event of theft or vandalism.
What renters insurance covers:
Standard renters insurance, known as an HO-4 policy, reimburses you for the loss or destruction of personal belongings from 16 specific events. They include:
Fire or lightning
Windstorm or hail
Riot or civil commotion
Damage caused by aircraft
Damage caused by vehicles
Smoke
Vandalism or malicious mischief
Theft
Volcanic eruption
A falling object
Accidental discharge or overflow of water or steam from within a plumbing, heating, air conditioning, or automatic fire-protective sprinkler system, or from a household appliance
Sudden and accidental tearing apart, cracking, burning or bulging of a steam or hot water heating system, an air conditioning system or an automatic fire-protective system
Freezing of a plumbing, heating, air conditioning or automatic fire-protective system, or of a household appliance
Sudden and accidental damage from artificially generated electric current (does not include loss to a tube, transistor or similar electronic component)
What renters insurance doesn’t cover:
Renters insurance won’t pay for damage from earthquakes or floods, meaning you’ll have to pay for repairs if you incur losses for one of these reasons. Flood insurance is available under a separate policy from the National Flood Insurance Program and possibly directly from your renters insurance company as well. Earthquake insurance also can be bought separately or as an endorsement or rider to your renters policy.
Other valuable protections:
Many people think of renters insurance as covering personal possessions only. But standard renters insurance also includes other protections that can be valuable to you. They include:
Liability insurance: If someone is injured in your home due to your negligence and sues you, a lawsuit could wreck your finances for years. The liability portion of your renters insurance policy covers you in these events, protecting you against lawsuits for bodily injury or property damage. It also covers damage you and your family accidentally do to others. An umbrella liability policy, which costs extra, will also cover you for libel and slander. An umbrella kicks in when you reach your liability coverage limit.
Liability also typically covers you if your dog bites a visitor, a neighbor or stranger, either on or off the property. Some insurers exclude dog bites from renters policies, however, so if you own a dog, check with your agent to be sure you’re covered.
A renters insurance policy generally covers both the cost of legal representation in a lawsuit and any damages awarded to the other party. Liability limits typically start at $100,000 and top out at $500,000; some experts recommend a minimum of $300,000.
Liability protection also typically includes no-fault medical payments coverage. According to the Insurance Information Institute, this “allows someone who gets injured on your property to simply submit his or her medical bills directly to your insurance company so the bills can be paid without resorting to a lawsuit.”
Additional living expenses: If your home is destroyed in a disaster covered by your policy, renters insurance pays for your additional living expenses. These include hotel bills, restaurant meals and other costs as your home is repaired.
Who needs renters insurance:
Some landlords will require you to have renters insurance before you sign a lease, or to buy it within a certain time period. Usually, though, it’s your call.
If renters insurance is optional, ask yourself whether you could afford to replace all your possessions if they were lost, damaged or destroyed. If the answer is no, renters insurance is a smart buy.
Know what you own
It’s important to take stock of what your belongings are worth because the answer will help you decide how much coverage you need. Your insurance agent can help you pinpoint the right amount of coverage, too.
Making an inventory before a problem occurs is essential to getting the claim money you’re entitled to. Note down each item you own along with its value and identifying information, like a serial number. Include everything you own on your list — even kitchen utensils, appliances, towels and bedding.
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