Accidents happen all the time. It doesn’t matter if you own a home or rent your property. A devastating catastrophe, like a fire, could destroy everything you own. Still, a lot of renters overlook the need for this critical coverage. The reasons you need it are defined by the coverage parts themselves.
Why You Need Renters Insurance
Renters insurance, otherwise known as the HO-4 policy type, can be purchased by individuals who do not own the property where they live.
The first part of the renters policy is the personal property section. This portion of the policy covers the items you own – for example, clothing, furniture, and household goods. There are exclusions and limitations to the cause of the damage, but if you were to become victim of a catastrophic event, you’d receive compensation for your lost valuables. This portion of the policy extends to the property in your home as well as to the property you have in your possession while traveling.
Loss of use is another important part of the renters insurance policy. If your apartment were to be damaged in a fire, this portion of the policy would help you to cover additional expenses related to maintaining a suitable standard of living. For example, you might need to rent a hotel room until your apartment is repaired.
The second portion of the policy covers your liabilities if you are responsible for 3rd party property damage or bodily harm. Situations of liability can vary, ranging from accidentally hurting someone or causing them illness, to being sued by a person that slips and falls on your rented property, regardless of negligence or fault. Policy limits can range from $100,000 in coverage to upwards of $1,000,000 depending on your situation and it is wise to discuss what a good limit is for you with an insurance professional.
Medical payments coverage is meant to compliment the personal liability coverage. The coverage limit is much smaller, often only a few thousand dollars, and is a “no fault” or “good faith” coverage. For example, if someone trips on your step and cuts his head, you and your insurance company may opt to pay their medical bills even if you are not responsible. This good faith action would take care of his or her expenses and reduce the odds of a lawsuit being filed against you.
How Much Renters Insurance Do I Need?
Depending on the company, the average renters policy starts with a minimum of $10,000 to $25,000 of coverage for your personal property. In order to determine if you need more personal property coverage, you’ll have to assess your belongings, what they’re worth, and what it would really cost you to replace them if they were all destroyed or stolen.
Your best bet is to take a simple inventory of the items you own. List where you purchased them and estimate the current value. You can use this number to estimate the amount of insurance you should purchase. Take photos and keep them with the inventory, in a safe deposit box or at another location, so you have proof of what you owned if you ever need to file a claim.
Your insurance professional can help you to determine how much renters insurance you need to purchase. He or she can also help you determine what items you own that need special coverage to ensure you get the right amount if your property is ever damaged.