You’ve worked hard and got yourself a good job in a fairly good neighbourhood. You’re finally started saving and paying off your student debt. You have a pet, healthy social interactions and life is good. All you need is a sweet little home to move in, while you work.
But then suddenly, the brutal reality of mandatory renters’ insurance hits you. Now you have no idea what it is, because you never thought a non-owner would need insurance. But there’s no need to freak out. Our quick little guide should definitely help to get you started.
1) Why do I need renters’ insurance?
For the same reason anyone needs any insurance. It helps to insure your household belongings and products such as jewellery, cutlery, silverware, electronics etc. against damages.
Moreover, accommodation expenses that might be needed by you when you’re staying elsewhere during repair of said damages are also covered by most renters’ insurance. Even personal injury is covered, in that if a friend or relative visiting your place slips and breaks a bone, he or she can claim the charges for medical bills from your insurance. In fact, damages caused by your pet to others is also covered under renters’ insurance.
Sometimes landlords will make it mandatory to own renters’ insurance, especially if you own a pet. This is because landlords’ insurance covers the property and damages along with it, but it does not cover you, or your belongings. Thus, any damage to them is not covered by this insurance.
Sometimes landlords will make it mandatory to own renters’ insurance, especially if you own a pet.
2) What events can I expect to be covered by renters’ insurance?
Renters’ insurance works on the basis of perils. These are predetermined events that your insurance is bound to cover when they cause damage to you or your belongings. Most of them include acts of God. There are 2 kinds of policies to be aware of, in this regard:
- Open peril policies: They’re the go-to policies as they do not have a set list and any event causing damage is bound to be covered. Of course, they come with higher premiums, but beyond the questions of affordability, these are the deals to look out for.
- Closed peril policies: They have a list of particular events which they cover. Thus, some policies may not cover floods because their base of operations is in a landlocked The premiums charged are lower and these policies are useful if budget is important for you.
3) What about damage or theft of insured property off premises?
People often lie about theft saying it happened on site. However, we’d suggest being honest. This is more so because several policies do cover theft off premises, like in your car or your workplace. If you do live in an unsafe neighbourhood, it is best to read through your policy and specifically check if this feature is present or not. However, items covered off premise may pay only a fraction of the amount if items are damaged in your house.
4) How much is my stuff worth?
In almost all democracies with a state and federal structure, this depends quite a bit on your state. In that, it is the state that regulates insurance, and hence it is the state that draws up the rules of estimating damage. The worth of your belongings is therefore determined by the method the state decides to employ.
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There are 2 common methods of property value estimation:
- Replacement value: This method pays the amount needed to repair or replace the damaged or stolen item.
- Cash value: This method pays for the current valuation of the item in the market, accounting for depreciation since product launch.
The question about how much is renters’ insurance going to pay you thus depends on the kind of policy you choose as well as the state you live in.
5) Is renters’ insurance transferable?
Yes. Almost all insurance can be moved from one rental to another as long as the list of your belongings stays the same. This is because renters’ insurance covers your belongings and has little to do with the property you rent. A few questions about your new location and a possible re-evaluation of your list of belongings might be the only formalities you will have to go through for this transfer to be a smooth and seamless experience.
Conclusion
The most important takeaway here is possibly that every policy differs ever so slightly and comes with its own pros and cons. It would be best to set up a list of your expectations and then go through several policies to see which one comes closest to fulfilling your use case scenario.
