The simple answer is yes! Is it mandatory? No, It’s not. Though having a renters insurance is not required by law, still many landlords require their renters to purchase insurance for safety purposes. This insurance can protect the landlord and the renter in many ways. Therefore, you will only be required to purchase renters insurance if your landlord or property management company requires it as terms on your lease agreement, and it’s legal for them to do so. Purchasing renters insurance is a wise deal to have. We all know that moving to a new house or apartment requires a lot of money. Not to mention all the hassle of packing and unpacking of your things is really exhausting. You may think that dealing with other things like renters insurance is just an additional workload for you to handle. But think again. There are enough reasons why many landlords require their tenants to have this. Though not all landlords do, but still purchasing insurance is an important option to consider.
Now, if it is not required by law, why have it if you have the option not to?
Here are the 3 reasons why you should get a renters insurance
- Your Landlord’s Property Insurance Covers Only the House or Building Itself, and Doesn’t Cover Your Personal Property. Only renters insurance can cover that and that is something tenants need to pay for. This usually causes misunderstandings when it comes to the coverage of the landlords and renters insurance. Many think that the landlord’s property insurance already covers the renters. But this is a big mistake. This is maybe the reason why only 41% of the renters are purchasing renters insurance. Little do they know that having insurance is always one of the most important things to consider. For example, one of the tenants from another building caused a fire. Let say all of your personal belongings were damaged because of the fire. If you don’t have insurance no one is going to pay for all your lost things but you. Another thing, if you don’t purchase renters insurance and you accidentally damage the house or unit you are renting, then you must pay the damages or worse you may receive a lawsuit from your landlord.
- Renters Insurance is Affordable. According to Insurance.com’s rate analysis, Renters Insurance’s average cost for one set of coverage limits is more or less $17 - $20 per month. Many landlords require their renters to have at least $1000,000 liability coverage. This amount can save you from unexpected perils and accidents. Many may say that they don’t need to purchase renters insurance because they don’t have many things in their house to protect. But guess what, that is the most common thing renters says. The thing is, renters tend to underestimate the value of their belongings. You may think that what you have doesn’t cost much but just think of all your necessities. Buying a new set of clothes, furniture, and appliances. Even the smallest things like a new set of cutlery, new pairs of socks and linens. If you calculate all of your things, it will add up and before you know it, it already costs thousands of dollars. And surely you don’t want to start from scratch if ever an accident happened and you lost everything without insurance to cover it up.
- Renters Insurance Covers a Lot. It protects you against losses to your personal property such as clothes, furniture, electronics and gadgets, jewelry and appliances. It also covers a long list of different perils like theft, smoke, vandalism, damage caused by vehicle accident, explosions, riot, fire, lightning, damage caused by snow or ice, hail, windstorm, damage caused by falling object like tree, volcanic eruption, damage from water like plumbing/air-conditioning/heating.
However, the damages that are not covered in standard policy are from floods, earthquakes, and hurricanes. Also accidents due to negligence. For example, you left the stove on and it causes a fire.
Liability coverage is included in a standard renters insurance. When someone got injured in your house let say a visitor or even a delivery guy who accidentally fell on your doorstep. The insurance covers legal expenses but of course, there is a limit. On average, liability coverage can come up to $100,000. And $1,000 to $5,000 for medical payment coverage. If ever you need or want your limit to be more than $300,000 then you must ask your insurance agent about an umbrella policy.
Other Covered Losses
In renters insurance, when it says that it covers your personal belongings it does not mean just your personal belongings that are with you. Meaning, even the things you have that you left at home, in your car and even the things you bring with you when you travel in any part of the world is covered. Theft is included in your policy. So let say, you forgot your laptop in your car and someone stole it. That will be covered. Even credit cards, stolen credit cards happen a lot of the time. When someone stole your wallet with your credit card in it, your insurance covers monetary fraud. The same thing for your checks, if there is someone is using your check without you knowing it, that should be covered too. But how about if you borrow something from a family or friend. Let's say you borrow your mom’s coffee maker and a leaking pipe damages it. Will that be covered? The answer is yes, it will be covered as well.
Additional Living Expenses
Another reason for you to purchase a renters insurance is this. When your rental house was damaged by a qualified peril and your house became uninhabitable, then your renters insurance will cover the cost for a temporary home. But of course, there is always a limit so might as well discuss your policies coverage thoroughly with your insurance agent.
Things to Consider
Actual Cash Value - is when your three-year-old bed got damage by a qualified peril, the insurance company will pay you for the amount of a three-year-old bed as well. For example, You bought a bed for $400 three years ago, your insurance company deducted the depreciation amount and pay you $180 for the amount of your three-year-old bed. Now for you to buy a brand new bed you need to get money from your own pocket because that $180 is definitely not enough to buy a new one. However, this policy has a lower premium.
Replacement Value- is if you bought a laptop five years ago for $1000 and it got destroyed by fire, the insurance company will pay you $1000 to buy the same laptop or more if the amount of that laptop happens to be much expensive now. This plan has a higher amount of premium but here is the catch, you may be paying a little more each month but it’s better than paying a lump sum of money all at once if ever you need to buy new appliances right?