Renters Insurance Info

your single source for renters insurance information

  • Increase font size
  • Default font size
  • Decrease font size
Home What is Renter's Insurance? Who needs insurance?

Who needs insurance?

Homeowners insurance is not just for those who own real estate property. The 33.8% of households in the 2000 US census who rent their dwelling from another can also benefit from insurance for renters. This is a subset of homeowners insurance, but it is a separate policy carried by the renter to protect his personal property. Who needs insurance for renters? Anyone who is not among the  40% who had renters insurance  from a 2008 Allstate study on the industry.

The Independent Insurance Agents & Brokers of America (IIABA) found in their own study that the main reason that many renters shun getting their own coverage is that they believe the monthly premiums will be at a prohibitively high cost, but costs for an average amount of coverage can be between $10 and $20 per month. This is a small price to pay to prevent paying the total out of pocket cost for repairs and replacements that is incurred by the uninsured. For instance, should there be a fire in the home, the landlord's homeowners insurance will cover the repairs to the actual structure, but the effects of the renter will not be covered. This means that the uninsured renter will have to pay for a new television, furniture, clothing, and anything else lost in the fire, but if he carried  insurance for renters, the insurance company would pay for part or all of the cost to replace the lost items, after the deductible is met.

Deductibles, premiums, replacement value, cash value, broad coverage, comprehensive coverage? What are all of these terms. Many renters avoid looking for insurance because they fear wading into the new terminology, but these terms are simple to understand, and they will help the renter to be able to make better comparisons between companies when shopping for the best price. The premium is the annual cost to carry the insurance policy, but this is typically broken down into 12 monthly installments to make the payments smaller and easier to meet. Deductible is a preset amount that the renter must pay before the insurance company begins to pay for any losses. Generally, the higher the deductible, the lower the monthly payments will be, but if something happens, the renter will need to pay for more.

Insurance for renters has two basic types of coverage. The most common is broad coverage which will pay for losses incurred during some of the most common events: fire, lightening, theft, and liability of the renter. Those who need to be covered for additional incidents need comprehensive coverage which will pay after any event unless it is specified as being excluded. Neither type of insurance for renters will cover  personal property in the event of a flood. For this, a separate flood insurance for renters policy must be obtained from Federal Emergency Management Agency (FEMA).

Cash value and replacement value refer to the amount that the insurance company will pay after the deductible. Cash value policies pay less on claims because they take the age of the items into consideration and subtract the depreciation value. Replacement value insurance for renters carries higher premiums but it will pay to replacement the items at the current market price.

Everyone should obtain insurance for renters to protect their personal goods. With the low monthly costs, there is no excuse not to have the peace of mind it offers.