Apartment Resources
Rental Insurance 101
What You Don’t Know Can Hurt You
Many people believe that they don’t need insurance because the property owner will be responsible for losses related to the rental unit, which is untrue. Landlords may be liable for losses caused by the owner’s negligence, but renters are liable for the losses created by their own negligence. Another common misconception is that you do not need insurance if you don’t have much personal property. However, renter’s insurance is still necessary because it also covers liability for injuries suffered by guests in your home or caused by your pet.
Why You’ll Need Renter’s Insurance
Have you ever:
- Gotten distracted while filling the bathtub?
If water overflows, it could damage the floor and seeps into the apartment unit below. You would have to pay not only to fix your own floor, but for your neighbor’s couch, TV, and other personal belongings damaged by the water as well. - Forgotten to turn off the stove?
If a fire results from your negligence, you must pay for damage to your own unit and other units, as well as any loss of your neighbors’ personal property caused by the fire. - Invited guests over or thrown a party in your apartment?
If one of your guests trips on a power cord at your place and breaks their wrist, you would be liable for their injury and treatment costs. Or if your pet bites someone, you can face a personal injury lawsuit.
These examples give you a snapshot of the many situations where renter’s insurance would save you from paying excessive costs out of your own pocket.
How to Get Renter’s Insurance
Some landlords require tenants to sign up for renter’s insurance before they sign their lease. Do some research and contact several insurance companies for their rates. Check first with your property manager to see if they work with a particular company and get discounted rates for multiple policies. Most insurance companies will offer lower premiums if you maintain your smoke or fire detectors or have a security system.
The cost of renter’s insurance is around $10-25 a month, which is very affordable compared to the cost of replacing all of your belongings or repairing serious damage to property. Renter’s insurance usually does not cover earthquakes, floods, hurricanes or other natural disasters, so you may need to purchase additional coverage if you live in an area where these are common occurrences.
In choosing your policy, you can opt for either actual cash value (ACV) or replacement cost value (RCV). While ACV covers the market value of your property at the time it was stolen or damaged, RCV will pay for the full cost of replacing the item with a new one. Although RCV coverage is more expensive, it is usually worthwhile. In either case, you must also pay a deductible.
Lastly, you will want to take a thorough inventory of your personal property. Take pictures of your belongings in the rooms where they are stored and keep proofs of ownership (such as receipts and warranties) in a safe place.
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