Renting a home or apartment comes with its own set of responsibilities and considerations, and one essential aspect often overlooked by tenants is renters insurance. Renters insurance, in simplest terms, protects your personal property in rented property from unexpected circumstances.
If you're a tenant, understanding what renters insurance is and what it covers can save you from financial headaches in the event of unforeseen circumstances. Here's a quick guide.
What Is Renters Insurance?
Renters insurance is a type of insurance policy designed to protect tenants from financial losses related to their personal belongings and liability. While landlords typically have insurance for the physical structure of the property, that coverage doesn't extend to the tenant's personal possessions. Renters insurance fills this gap, offering a layer of protection for the tenant's belongings and more.
Renters insurance is not a legal requirement, although some landlords prefer tenants to have some type of coverage. The cost of obtaining renters insurance varies depending on the company providing it. However, the national average cost for renters insurance is $173 a year for $15,000 of coverage, according to Forbes Advisor.
What Does Renters Insurance Cover?
Renters insurance provides a number of coverage types, including:
1. Personal Property Coverage
One of the primary benefits of renters insurance is personal property coverage. This protection extends to the tenant's personal belongings, such as furniture, electronics, clothing, and other valuables. In the unfortunate event of theft, fire, or certain natural disasters, renters insurance can help cover the cost of replacing or repairing these items.
Having said that, renters insurance does not cover damages caused by earthquakes and floods. Those are offered in different insurance policies, specifically earthquake insurance and flood insurance.
2. Personal Liability Coverage
Most renters insurance also includes personal liability coverage. This aspect is crucial in situations where the tenant is found responsible for causing damage to the rented property, inadvertently hurting someone else, or facing a lawsuit due to negligence. For instance, you knocked an errant baseball through the window of a neighbor, personal liability coverage can pay to replace the window and cover the medical bills if an individual was injured during the incident.
In addition, personal liability coverage helps cover legal fees and defense costs if you are sued over the incident.
3. Medical Payments Coverage
In the event that someone is injured on the rented property, renters insurance may include medical payments coverage. This aspect assists in covering medical expenses for the injured party, regardless of who is at fault. Having said that, medical payments coverage only covers minor medical claims. It will not cover larger medical claims, property damage, and legal fees if you are sued because of an accident.
4. Additional Living Expenses Coverage
If your rented home becomes uninhabitable due to a covered event such as a fire or tornado, renters insurance may provide coverage for additional living expenses. This can include the cost of temporary accommodation, meals, and other necessary expenses incurred while your home is being repaired or rebuilt.
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