Property Insurance for Renters: Why Do You Need It?

Many people rent to save money on monthly expenses since apartments are usually cheaper than mortgages. However, renters who own valuable belongings should think about at least getting a renters policy. However, you may need special property insurance for some of your prized possessions.

Insurance Designed for Renters

If you are considering property insurance while renting, make an inventory list of your items of value that you would want to replace in the event of a disaster such as a fire. Share the list with your insurer, who can then customize a renters policy for you so that your personal property is protected.

Renters are typically covered to a degree by the landlord’s insurance policy, but coverage is limited to the structure. If the apartment complex burns down, your policy might pay for your temporary living expenses at another location while the building goes through reconstruction. However, you need insurance coverage for your own personal items if specific perils occur that lead to damage or loss.

Understanding Liability

Liability is the part of insurance that deals with taking responsibility for risks. For example, a landlord takes responsibility for protecting tenants by covering their units with commercial liability coverage. Renters’ policies have liability coverage for damage to the owner’s property. In the business world, many companies buy Commercial General Liability (CGL) insurance, which combines property and liability coverage.

You’ll have to check the liability section of your policy to see what it covers before you sign up. Not all renters have the same type of coverage. Ask your insurer if your renters’ policy covers damage that occurs during a party hosted by you at your apartment. Knowing this information is important if you plan to invite guests over to your apartment on a regular basis.

Tenant Coverage

When renters get tenant coverage (which is another name for renters insurance), they will usually deal with one of the following three types of policies:

  1. Basic form policies – cover losses associated with typical perils such as fire, lightning, windstorm, hail, or explosion.
  2. Broad form policies – cover basic perils along with water or structural damage.
  3. Special form policies – once known as “all-risk” policies, this coverage pays for all perils except for exclusions listed in the plan.

Within a renters policy, the three areas of coverage are personal property, liability, and additional living expenses. That means it protects your personal belongings, pays for damage you cause to others, and can be the solution for rental reimbursement if the unit becomes unlivable due to a disaster.

You can get coverage for a building you occupy but do not own if the tenant policy mentions “building occupied by the insured.” It might be a building you rent, lease or occupy as part of an agreement.

Extending Coverage

Once you’ve determined you need insurance to protect your property, even if it’s on rented space, you can then set your coverage limits and deductible. In some cases, you may decide to extend beyond your renters’ policy’s coverage limits, based on how you use the property. If you are always inviting crowds to your rented space, you will likely need to set higher coverage limits than a business that doesn’t deal with much office traffic.

If you own rare antiques, you will probably need special coverage. Anything difficult to price may require an appraisal by your insurance agent.

Renters need to think about renters insurance if they have valuable belongings to protect. You may need special coverage for certain items. Contact us at John E. Peakes Insurance Agency for more information involving property insurance while renting.

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