Renters Insurance: What it is and How to Get One?

Last Updated on May 20, 2021 by MoneyVisual

A renter’s insurance, or as it is sometimes known as- a tenant’s insurance, is quite similar to homeowners insurance. The only difference being renters insurance does not cover any damage caused to the structure.

To better understand this, let’s take an example. Say you rented an apartment, and somehow the structure bears damage, be it due to natural events or negligence, the insurer will not pay any compensation. On the other hand, if your personal property such as your television, or your furniture is damaged, you can expect compensation for the damages.

But, how does the insurer decide the difference between the two? Or more importantly, what benefits does renter’s insurance offer to tenants?

Perhaps, we could help you answer some questions about renters insurance. Gradually, by the end of this article, you should be able to understand whether you need it or not. And simultaneously, if you do, how do you shop for it.

So, without any further ado, lets’ begin.

Privileges Offered By Renters insurance

It is always beneficial to make a well-informed decision, especially when you’re buying an insurance policy. Acquiring the necessary information before buying tenants’ insurance is, equally important as shopping for a car or a house, for that matter.

Creating a mind map to figure out the pros and cons of tenant’s insurance might do the trick, though. Like buying a car, you must evaluate the value for money you pay to buy your tenant’s insurance.

Loss And Theft Coverage

The basic coverage under any tenants’ insurance policy is against loss and theft of personal belongings. For example, your clothes, furniture, and other personal property will be compensated against theft or loss.

Your insurance company would either offer you a replacement or pay in cash for your property’s value. However, the compensation would depend on how much you pay for the premium. And likewise, would also depend on the covered items’ value at the time of claim.

It is noteworthy that not all your belongings are covered under loss and theft coverage. For example, some items such as jewelry and heavy appliances usually require additional coverage. It is better to consult with your insurance provider before assuming such coverages.

Additional Living Costs

Accidents come unannounced and can leave expensive wreckage behind. For example, natural disasters can damage a home, and render it uninhabitable.

It is noteworthy that when your primary dwelling, the rented property, is left unlivable after an accident, you can expect your insurance policy to cover additional living costs.

For example, if there is a health hazard breakout, you might need to get it controlled. In most cases, the home is left uninhabitable for sometime after the chemical treatments are done. It means you’ll either need to rent a place or stay at a hotel for the while in question. And you can expect your insurer to reimburse the expenses for the same.

Liability Coverage

Another standard coverage under renters insurance is a third-party liability. As the name suggests, third-party liability is the cost of repairs and medical expenses for someone who is not listed as a beneficiary in the policy.

To better understand how liability coverage works, let us take an example. According to the experts at LoPriore Insurance Agency if someone is injured at your premises, either due to your negligence (or somebody else’s) it will be covered under renters insurance. Expenses like medical bills, loss of income, and so on will be compensated to the entitled party.

However, it is also noteworthy that the coverage limit depends on your policy. And also on the premium you pay. In simple words, a higher premium would mean higher coverage and vice versa.

How To Get A Renters Insurance?

If you’ve been following us until now, you must be pretty convinced about how a tenant’s insurance can help you. However, you wouldn’t want to buy the first policy that you come across. As already mentioned, making an informed decision is always better.

So, what information should you be gathering before buying renters insurance?

Figuring Out The Coverage

You already know what a tenant’s insurance policy can cover for you. However, you must still compare the coverage between different policies.

Neither all insurance companies nor the policies, offer the same coverage throughout. In most cases, the coverage depends on a lot of factors, like the value of the property, your income, your credit score, and so on.

It is, thus, pretty vital for you to figure out the coverage you need, and what you are getting. And then proceed further with your buying decision.

Comparing The Premiums

Another thing you ought to be comparing is the premium you are to pay for the cover you expect. It needs no mention that the more you expect to put under insurance coverage, the more you would be paying in premium.

Besides, your income, credit score, and other liabilities also affect the premium you pay.

You not only should think about the necessary coverage but also your budget. After all, you wouldn’t want to be paying exceptionally high insurance premiums.

Looking For Maturity Value

In most cases, a renters insurance policy is consumed upon maturity. In other words, you won’t receive any benefits, neither monetary nor compensatory, upon maturity of your policy.

However, there are some insurance companies that not only offer you a cover but also pay you upon maturity of your policy. Usually, such policies fall under the category of mutual funds and are indifferent from investments.

So, you should rather inquire about the maturity value of your policy, before you buy. At the same time, you must note that term insurance policies won’t offer any maturity value. So if you expect to receive a sum on maturity you should look for longer termed insurance policies.

The Gist…

A renters insurance policy not only saves you from emergency expenses but also can act as a saving for your future. So, it is necessary to invest in a policy that benefits you in the long term, while befitting your budget at the time of purchase.