Renters Insurance: What Is It And Why Do You Need It, Anyway?

If you are like most renters, you probably don't have renters insurance. According to a survey conducted by the Insurance Information Institute in 2012 only 31% of renters purchase renters insurance. You may assume that you don't need insurance because your landlord has homeowners insurance. You may be surprised to learn that in order to protect your possessions you need a separate insurance policy.

Doesn't the Landlord's Insurance Cover Everything in My Rental Space?

Surprisingly, no. Your landlord or the property owner of your rental unit must insure the property, but that doesn't include the contents of your unit. This insurance policy covers the landlord's property, not yours. That means if your rental unit is destroyed by fire, burglarized or damaged from a natural disaster, the landlord will be compensated for the value of his property, but you won't see a cent.

What Does Renters Insurance Actually Cover?

Renters insurance protects you in a wide range of circumstances. It covers your personal belongings if they are lost or damaged by fire, water, storms, theft or vandalism. It even covers the loss of another tenant's property if you accidentally cause damage to their property from burst pipes or other mishap, and it covers accidental damage to the landlord's property. Always check the terms of your policy to determine the exact coverage.

How Do You Get Renters Insurance?

You can purchase renters insurance from any major insurance company. Some companies offer a discount if you carry more than one insurance policy with them. Check with your auto insurance company to find out if it handles renters insurance.

Is Renters Insurance Expensive?

Renters insurance is relatively inexpensive. The Insurance Information Institute says that in 2012 the rates for renters insurance ranged from $118 to $244 a year depending on the state you live in. Rates also vary according to the amount of coverage you require.

How Do You Know How Much Your Possessions Are Worth?

Many insurance companies provide you with a calculator designed to calculate the worth of your personal possessions. If your personal possessions exceed the monetary limit of a basic renters insurance policy, you may need to purchase additional insurance. High value jewelry, electronics, art and other collections, such as coins, may require their own policy. Otherwise, your personal possessions and your clothing all go on the same policy.

How Much Will You Be Reimbursed If Your Rental Unit is Damaged?

That depends on whether you choose a policy that pays for the replacement cost of your possessions or the actual value (minus depreciation) of your possessions. If you choose a replacement value policy, it doesn't matter how much you paid for the original item, you will receive what it costs to replace it at the time of damage. If you bought a large screen TV when the price was high, you will only receive what it costs to replace one of equal quality today. On the plus side, if the value of the item is higher today than when you purchased it, you will be compensated for its worth today.

Will Renters Insurance Pay for Damages When You're Away From Home?

Surprisingly, yes. Most policies cover your personal possessions even when you are traveling away from home. That means if you take your computer or camera with you on a business or leisure trip and it gets stolen or damaged, it will be covered under your renters insurance.

If you are a renter and you do not have rental insurance, take the time to explore the benefits of purchasing it to protect your belongings. If the unthinkable happens and you lose your possessions in a disaster, you will be glad you did. As an added bonus, most renters insurance policies also cover temporary lodging and necessities until you find a permanent home.

For more information on renters insurance, check out a company like Biglow & Company.