What Renters Insurance Protects
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Although renters insurance is rarely required when renting an apartment, it is fast becoming the norm as the number of people who choose renting over buying increases. Like many homeowners, renters have assets to protect such as computer equipment and other electronics to clothes and artwork. Rarely will the property owner’s insurance policy cover your personal property. It will likely cover only the landlord's building.
Renters Insurance Coverages
A renters insurance policy may protect your belongings in the event of a fire, flood, or burglary. These occurrences are called “named perils.” Other named perils may include vandalism, lightning, smoke, windstorm, malicious mischief and accidental discharge of water. A renters insurance policy may also protect you financially if someone sustains injuries resulting from an accident that occurs in your apartment.
Most major insurance carriers provide liability protection and coverage for at least 15 named perils. The most common named perils are:
- Accidental discharge or overflow of water
- Aircraft or vehicles
- Artificially generated electrical charge
- Falling objects
- Fire or lightning
- Riot or civil disturbance
- Sudden and accidental tearing apart
- Vandalism or malicious mischief
- Volcanic eruption
- Weight of ice, snow, or sleet
- Windstorm or hail.
Typical coverage types are actual cash value (ACV) and replacement value. Actual cash value pays the value of the items lost at the time of the damage or loss. Replacement value pays the amount of money it takes to replace the damaged or lost items.
Liability protection typically covers medical payments and your legal defense if the accident and any injuries occurred inside or outside your home. It is important to keep in mind that liability protection applies only when the accident is caused by you. And, this coverage does not apply to auto accidents that occured outside your home.
Renters Insurance Costs
Renters insurance is the least expensive type of insurance. A typical policy which includes liability protection and protection against common named perils, may average anywhere from $5-$40 per month. The amount you pay will depend on the amount of coverage you need. For example, $30,000 worth of property coverage and $100,000 of liability coverage may cost around $12 per month.
You can lower your rate by choosing actual cash value over replacement coverage. Replacement coverage costs around 15 percent more. You might install protective devices such as smoke detectors, an alarm system, and/or fire extinguishers. You can also lower your rate by combining your auto and renters insurance policy. Combining can help you save 10 to 15 percent on your policy.