What Does Renters Insurance Cover?
If you own your home, homeowners insurance will cover damages to your house as well as many of your belongings. Unfortunately, it’s not so simple if you rent. Your landlord’s insurance will take care of damage to the building but not your belongings.
So if a pipe bursts in your ceiling and ruins your furniture, your landlord will be covered for damage to the ceiling and floors. But you’ll be on your own when it comes to replacing your soggy couch. This is where renters insurance comes in. You can cover your belongings against damage and theft for a rather low cost. Thankfully renters insurance doesn’t just stop there.
Read on to learn about what else can be covered by a renters insurance policy.
What Does Renters Insurance Cover?
A standard renters insurance plan only covers certain types of damage. For example, most cover damage caused by:
- Smoke damage
- Water damage
This typically shows up in the following types of coverage:
- Property coverage: This applies when your property, like a couch, is damaged by a covered event.
- Renters liability coverage: This can protect you if you’re responsible for an injury to someone who doesn’t live with you.
- Medical payments coverage: If a guest is injured in your home.
- Additional living expenses coverage: Can help with the extra costs of housing and food if you have to move out for a while when your home is repaired.
These are the most common types of coverage but you can typically buy other, optional types.
Providers usually offer additional coverage, which may include:
- Replacement Cost Coverage: Most standard renters insurance plans include actual cash value as opposed to the replacement value for your belongings. Cash value considers depreciation when calculating a payout, which means you may not get enough to buy a new version of the item that was lost. Replacement cost coverage can help by paying out the amount it actually costs to replace the item.
- Scheduled Personal Property: This is additional insurance for high-value items or special collections. Common examples include jewelry, coin collections, sporting goods, and specialized electronics.
- Business Merchandise Coverage: This has become a popular addition, especially for people who sell products online through a home business.
- Incidental Business Liability: If you have a home business, like a babysitting business, this helps protect you against liability claims related to your business.
- Additional Coverage for Disasters: Depending upon where you live, you might consider extra coverage for natural disasters such as floods, earthquakes, wind, or hail.
- Identity Theft Coverage: This may help in efforts to recover your identity by assisting in notifying credit bureaus and replacing important documents. It may also help with compensation for your time and other related expenses.
What Does Renters Insurance Not Cover?
As important as it is to know what renters insurance covers, it’s equally important to know what it doesn’t. Standard renters insurance typically doesn’t cover the following:
- Natural Disasters: Damage from earthquakes, sinkholes, and flooding isn’t typically covered under renters insurance. You may be able to purchase separate coverage if you live in an earthquake or flood zone.
- Pests: Damage by bugs and rodents is typically not covered by renters insurance.
- Expensive Items: Expensive items like art or electronics aren’t usually covered under a standard plan. Several providers offer add-ons for these types of belongings. Be sure to ask your potential provider if this is something you’re interested in.
- Terrorism or nuclear war: Prior to 9/11, it was common for insurance policies to include protection for terrorism. Now you’ll need to pay extra for this type of coverage.
- Stolen Vehicles: Renters insurance may cover items stolen from your car, but it won’t cover your car if it’s stolen. That’s what auto insurance is for.
- Roommates’ Property: Your roommate may live under the same roof, but that doesn’t mean their property is covered by your insurance policy. They’ll need to buy a separate one to cover their own belongings. Consider a joint policy if you live with a roommate.
- Lost Security Deposit: A renters insurance policy won’t help you get your security deposit back.
Renters insurance is a smart way to cover your property if you’re renting your home. While it doesn’t automatically cover everything, many insurers offer additional coverage for an extra fee. It’s surely a better deal than paying out of pocket to replace or repair your property.