Not everyone who rents a home or apartment realizes it, but just as a homeowner should have insurance to cover accidents to or on their property, renters also need insurance. If a tree falls onto the roof of a home you are renting, the landlord’s homeowners policy will pay for the repairs. But who pays for damage caused to items you had stored in the attic, your broken china or collectible stained glass? You will – unless you have renters insurance. Here is another example: should someone shatter a window while you’re away on vacation, the landlord’s homeowners policy will cover the glass, but not your stolen audio equipment. Renters insurance also provides liability protection should someone become injured on or off the rental property and decides to sue you.
Renters insurance covers a wide range of catastrophes. Most types will insure your belongings against lightning strikes, fire and smoke, hail, explosions, water damage from sprinkler systems, broken pipes or other interior cause, electrical charges and the like. Many policies cover a range of natural disasters, although the more likely such disasters are in a given area, the more likely they are to be excluded from a basic policy.
Before purchasing renters insurance, you will want to review the options. For example, an actual cash value policy might be a good fit for renters who prefer to make lower payments and own newer furniture and appliances. Conversely, renters with older but functional belongings may get better protection with a replacement cost policy, as the replacement cost would be considerably more than their belongings’ actual cash value. It is also important to understand the deductible and the total dollar amount of the coverage.
Renters should also consider the difference between “all risk” and “named peril” insurance policies. “All risk” policies are written to insure against every possible disaster except those that are specifically excluded. For example, if a water line breaks and causes water damage to your property, the insurer can only refuse to pay if damage due to water line breaks was specifically excluded from your “all risk” policy. If you own a “named peril” policy however, covered risks are specifically listed. In this case, damage due to water line breaks would have to be specifically included in the policy’s list of perils before the insurer would pay out.