How Does Renters Insurance Work in 2023?
Renters insurance is a cheap way for people who rent their homes to protect themselves. It protects against the loss of personal items, some types of liability, and temporary relocation if a covered event makes a rental unit unlivable.
Even though it’s pretty simple, you might be curious about how renters insurance works. Before you need insurance is always the best time to learn about it, not after.
This guide to how a renters policy works explains what renters insurance is, how to figure out if you need it, how and where to shop for renters insurance, how to choose a policy, how much insurance to buy, and what a typical policy covers.
What is insurance for renters?
You should think about getting renters insurance if you rent your home. You can get renters insurance if you rent an apartment, condo, townhouse, or any other type of attached or detached home.
A common misunderstanding is that if something bad happens on your rented property, your landlord can be made to pay for any damage to your belongings, any injuries that happen, and any extra costs you may have. The truth is that the landlord’s insurance coverage for the building or rental unit does not cover you as a renter.
A standard renters insurance policy also has two other helpful parts: coverage for liability and coverage for moving. In addition to covering the property, renters insurance covers the policyholder’s legal and liability costs if an accident happens on the rental property and leads to a lawsuit. It also pays for extra living costs if the policyholder and other covered occupants have to move temporarily because of a disaster covered by the policy.
Even though these are the most common coverages, each policy is unique. Because of this, it’s important to compare the details of each policy you’re thinking about. Smoke, fire, explosions, theft, vandalism, windstorms, lightning, natural disasters, and water damage from plumbing or leaks from a neighboring unit are just some of the things that are often covered. Most policies don’t cover earthquakes and floods caused by weather or other outside water sources.
Do renters need insurance?
Landlords sometimes need renters to have insurance. Even though a landlord will probably get paid for property damage caused by a disaster, it is still in the landlord’s best interest to make sure that renters can afford to deal with the same problems.
Even though renters insurance isn’t required by law, landlords can require it as a condition of a lease. Whether you’re renting from an individual or a large management company, and no matter how big or small the rental property is, you shouldn’t be surprised if the lease says you need to show proof of renters insurance.
Why is it a good idea for a landlord to make sure that renters have insurance? If renters have their own insurance for disasters or accidents that happen on the property, the landlord is much less likely to be sued over damaged belongings, injuries, or other similar problems.
Even if the landlord is found not to be legally responsible, a lawsuit takes time and costs money. Also, a tenant or potential tenant who can show proof of renters insurance is usually seen as a better candidate than one who can’t or won’t get renters insurance.
Do I need insurance if I’m a renter?
How do you figure out if you need renters insurance if your landlord doesn’t make you get it and it’s up to you? The Insurance Information Institute (III) says that most renters would be smart to get renters insurance.
Most households can afford renters insurance, and the coverage it gives is useful in a wide range of disasters and other situations. Renters insurance is probably a good idea if damage to your things or the possibility of having to move temporarily because of a disaster would be a big financial problem.
The III says that most renters insurance policies from different companies are similar in what they cover and how they work. Renters insurance is usually affordable, so most people should focus more on finding a company they feel comfortable with and a policy that meets all their needs than on finding the cheapest policy possible.
If you’re happy with your current auto, life, or any other type of insurance company, that’s a good place to start. But you should also look into other companies based on suggestions from family, friends, and real estate agents you know. You can get quotes from a lot of different renters insurance companies online, which makes it easier to compare prices.
But keep in mind that not all insurance companies for renters work in every state. (See the table below for what states have it.) In the end, you should choose a company that has good customer service and helps you understand the policy you’re thinking about buying.