Whether you live in an apartment, condominium, townhouse, off-campus college housing, or other type of leased property, a rental insurance policy is a wise investment. While your landlord’s insurance covers losses related to the building, your personal property is not covered under their insurance.
For a modest price, renter’s insurance covers the cost of damage to or loss of your personal property. For further protection against financial losses, “replacement cost coverage” can be purchased for your belongings. All property depreciates (loses value) over time. Replacement cost means that the insurance company reimburses you for the current cost of replacing the lost item, not what it is worth as a used item. If your policy is written for “actual cash value” (the amount the used item is worth), you pay the difference between that amount and the price of a new item, plus the policy’s deductible.
The Advantages of Liability Coverage
A rental insurance policy is advantageous because it covers financial losses in addition to property losses. Reimbursement for reasonable living expenses (if you are displaced from your home by a covered event) and liability for accidents are other types of covered losses. Renters sometimes forget that a fire or explosion can cause enough damage to force them out of their apartment while the building is being repaired. Renter’s insurance pays for a temporary apartment for whatever period of time the insurance company deems reasonable.
In addition to paying for damage or loss of your personal property, a rental insurance policy covers you for liability should someone be injured while visiting your home. Liability protection covers lost wages and medical expenses for an injured visitor. It may also pay for a lawyer if you are sued by someone who is injured inside or outside of your apartment.
Another scenario involving liability occurs when a tenant’s actions damage the building. For example, careless smoking or cooking could start a fire. In this case, your landlord’s insurance company might sue you for damages. To ensure adequate liability coverage, always check the policy’s liability limit, since this determines how much of the medical and legal bills the insurance company will pay.
Rental History and Rental Insurance Quotes
Rental history can affect insurance premiums. Landlords and insurance companies review a prospective tenant’s rental history when deciding whether to rent an apartment or provide insurance to them. Property damage caused by a tenant’s negligence, or a history of frequent insurance claims, can increase the cost of renter’s insurance premiums. In some cases, it could cause an insurance company to deny coverage altogether. Obtaining adequate insurance to pay for property damage caused by negligence (such as letting a tub overflow) helps you to afford the repairs and maintain a positive rental history.
The peace of mind from knowing that your belongings can be replaced in an emergency (and that you are covered for liability) outweighs the cost of a rental insurance policy. Think of it as a small investment to protect your current assets and future financial health.
Lisa Bernstein: As a long-time apartment dweller and seasoned condominium trustee, I have dealt with numerous landlord-tenant, property management, and day-to-day apartment complex issues. My extensive, direct experience has led to invaluable insights into apartment life from both the tenant and management perspectives.