Much like in owning a home, you also need to protect yourself from financial losses due to unforeseen circumstances. Specifically, you need protection from theft or damage to personal possessions, and from lawsuits arising from damage to property caused by you or a family member, or when a visitor gets injured while inside your residence.
These days, we have insurance for almost everything. Whether it's a car, a house, or a body part, you can bet there's an insurance policy. But what exactly is a renter's insurance? What can it do for you? Why would you need one? Find out everything you need to know right here:
What is Renter's Insurance?
Most renters think that their landlord's insurance policy will keep them and their belongings covered in case of any problem. Most of the time, however, that is not the case. This is where renter's insurance comes in.
What a renter's insurance does is basically protect the renter's personal property in a rented space. Whether it's a condo, a home, or an apartment, as long as it's rented, renter's insurance can be applied. If there are events like fire, theft, or an injury in the vicinity of the rental property, the renter's insurance will have you covered.
How Does Renter's Insurance Work?
If there is a loss in your belongings that is covered by the renter's insurance policy, the insurance company can help cover the costs. However, how much you will receive will depend on the type of policy you have with the company. Here are two basic types of policies:
Actual Cash Value coverage - ACV coverage means the insurance company will reimburse you for the corresponding replacement value of the lost or damaged belongings but taking into account as well the depreciation of the possession. So, the payout will typically be lower than the market value of your damaged or lost possession.
Replacement Cost coverage - RC policy covers the cost necessary to replace the lost or damaged items based on its current market value. However, your monthly premium will be higher as compared to ACV coverage.
What Will Renter's Insurance Cover?
Most renter's insurance policies will cover the following events:
1. Struck by lightning
2. Burned by fire
3. Windstorm
4. Hail
5. Frozen plumbing system
6. Vandalism
7. Theft
8. Vehicle impact
Depending on the policy, your renter's insurance may also cover the following circumstances:
You can't live in your home - Let's say the place got burned and is under repair. Your policy can also cover the cost of your temporary living arrangement. This is usually until your home is repaired.
Items inside the vehicle are damaged or stolen - Depending on the policy you chose, you can also get paid for the things that you keep in the car. Some examples are laptops, phones, or other belongings. This does not, however, cover systems installed in the vehicle.
Someone is injured while at the premises - If a guest is harmed while in the property, you may be able to receive money to cover the medical costs. This may also include legal fees, in case the event leads to court.
Why Do I Need Renter's Insurance?
Aside from keeping your personal belongings safe, it can also get you out of trouble when liability issues kick in. You will also have peace of mind since if there were anything to happen, you wouldn't worry about losing a place to stay.
READ NEXT: Here's What You Need to Know Before You Buy a House at Auction
