Renter's Insurance Revolution: Unraveling The Evolution Of Tenant Protection

Renters insurance has changed over the years to include more types of coverage for tenants. The insurance policy is designed to protect renters living in a house or apartment, and it covers their belongings and living arrangements after a covered loss. While it is not required by law, landlords may require tenants to have renters insurance to protect their personal belongings and cover liability claims. The cost of renters insurance is relatively low, ranging from $15 to $30 per month on average, depending on factors such as the amount of coverage, type of coverage, deductible, and location. The insurance covers losses to personal property, liability protection, additional living expenses, and medical payments coverage. It also covers belongings when travelling, and some policies offer replacement cost coverage instead of actual cash value coverage.

Renter's insurance is now more widely required by landlords

Renters insurance is now more widely required by landlords. While it is not a legal requirement, landlords can include a clause in the lease agreement that makes it mandatory for tenants to have renters insurance. This is becoming increasingly common, with 81% of landlords saying that a tenant's willingness to get renters insurance can make or break a deal.

There are several reasons why landlords are increasingly requiring tenants to have renters insurance:

Reduces the risk of lawsuits

If a tenant's belongings are damaged or stolen, they might sue their landlord for failing to protect their property. However, if they have renters insurance, they are less likely to take legal action against the landlord.

Protects the landlord against personal liability

If a guest is injured on the rental property, the injured party might blame the landlord and sue them for damages. Renters insurance includes personal liability coverage, which can help cover medical and legal costs, reducing the financial burden on the landlord.

Helps cover relocation costs

In some states, landlords are responsible for covering the cost of temporary housing for tenants if their rental property becomes uninhabitable due to a fire or other natural disaster. Renters insurance can help cover these relocation costs, providing financial relief to landlords.

Makes it easier to allow pets

Some renters insurance policies include pet liability coverage, which can help cover costs associated with pet-related incidents, such as dog bites. This makes it easier for landlords to adopt a pet-friendly policy and attract a wider pool of applicants.

Assists in screening responsible tenants

Requiring renters insurance is an indirect way for landlords to screen potential tenants. It is believed that tenants who carry renters insurance are more likely to be responsible, cautious, and considerate of their surroundings. This helps landlords choose trustworthy tenants who are likely to pay their rent on time and respect the rental property.

It covers personal property and liability

Renter's insurance covers personal property and liability. This means that if your belongings are lost, stolen, or damaged, your insurance company will reimburse you for your losses. This includes items stolen from your car or while you're travelling. It also covers liability, meaning that if someone is injured in your home, or you or another covered person accidentally injure someone, your insurance will pay any court judgments and legal expenses up to your policy limit.

Personal property coverage is what most people think of when it comes to renter's insurance. It covers personal belongings such as furniture, clothing, shoes, electronics, appliances, kitchen equipment, home goods like bedding and towels, and sports and hobby equipment. Certain personal belongings may be excluded from a standard policy if they're above a certain value, such as jewelry, artwork, collectibles, and specialized computer or hobby equipment. You can add coverage for these items if they exceed standard coverage limits.

Personal property coverage may not help protect everything you own. For example, certain types of belongings, such as jewelry or a coin collection, have limited coverage under a standard renter's insurance policy. You may be able to add additional coverage, called scheduled personal property coverage, to your policy to help protect your valuables. Your insurance provider can help you determine whether this coverage makes sense for your situation.

Renter's insurance liability coverage typically starts at a $100,000 limit for claims or lawsuits and can be increased if necessary. It covers injuries to people or damage to their property, as long as they are accidental and unintentional. For example, if a guest is injured in your rental property and you are found legally responsible, liability coverage may help cover damages. It also covers legal expenses if you're sued over an incident that occurs in the place you're renting.

It's relatively affordable

The average renter's insurance policy costs $15 to $30 a month, according to the National Association of Insurance Commissioners (NAIC). However, renter's insurance rates vary based on where you live and how much coverage you need. The average renter in North Dakota, for example, paid annual renters insurance premiums of just $115, while the average renter in Mississippi paid $252.

The cost of your policy depends on where you live, the company, the amount of your deductible, and the chosen level of coverage. A basic policy covers your personal property, renter's liability insurance, and additional living expenses if you are temporarily displaced. You can increase your coverage by increasing limits, adding riders or floaters to protect particularly valuable possessions, adding protection for specific kinds of disasters like floods or earthquakes, or increasing your protection against liability.

You can lower your premium by choosing a higher deductible. This is the amount you’ll have to pay out of pocket before your insurance coverage kicks in to reimburse you for a covered event.

It covers additional living expenses

Renter's insurance can cover additional living expenses if your home becomes uninhabitable due to a covered peril. This includes costs such as hotel bills, food, and other expenses incurred while you are unable to live in your home. The coverage is meant to maintain your standard of living and only covers additional costs, not your typical expenses such as your mortgage or utility bills.

Most renter's insurance policies include additional living expenses coverage, but the amount and duration of coverage can vary. It is typically calculated as a percentage of your dwelling coverage, usually around 10% to 20%. For example, if you have $200,000 of dwelling coverage, your additional living expenses coverage might be $40,000. This coverage usually lasts until you can move back into your home or until you reach your coverage limit, whichever comes first.

It is important to keep in mind that additional living expenses coverage does not cover all costs. For instance, it does not cover costs that are part of your normal expenses, such as utility bills or groceries. It also does not cover damage to the structure of the building, as this is typically covered by the landlord's insurance. Additionally, there may be specific exclusions or limitations depending on your policy, so it is important to carefully review your policy to understand what is and is not covered.

Overall, additional living expenses coverage is an important component of renter's insurance that can provide valuable financial assistance if you are temporarily displaced from your home due to a covered loss.

It covers your belongings when you travel

Renters insurance covers your belongings when you travel, meaning you can take comfort in knowing that your possessions are protected from theft or damage, even when you're not at home. This includes your personal belongings, such as clothing, electronics, and jewellery, and can also cover items in your car or in storage.

However, it's important to note that there may be a limit on how much coverage you have outside your home, typically around 10% of your total personal property limit. Additionally, certain high-value items, such as jewellery, may have sub-limits within your policy. To ensure you have adequate coverage for these items, you may need to add a rider to your policy or schedule them separately.

Before travelling, it's a good idea to review your policy or consult with your insurance agent to understand the specifics of what is and isn't covered while you're away from home. It's also recommended to document your belongings, including their make, model, and value, as this will be helpful if you need to file a claim.

In the unfortunate event that your belongings are lost, stolen, or damaged while travelling, be sure to document what happened as soon as possible and notify the appropriate authorities, such as the local police or hotel security. This documentation will be crucial when filing a claim with your insurance company.

By taking advantage of the coverage provided by renters insurance when travelling, you can rest assured that your belongings are protected, giving you peace of mind to fully enjoy your trip.

Frequently asked questions