Everyone looks forward to a fun family vacation during the summer. Some of my best memories from my childhood have been made during vacations and road trips that I have taken with my parents and siblings. There was always so much to look forward to during these trips: fun games during the long car rides, the interesting stops along the way, and even the forced family photos that we could look back on years later. Since this is something near and dear to my heart, I decided recently to buy a second home to rent out as a vacation property; I wanted to help facilitate memorable vacations for other families, just as I had as a child.
When you first move into a new rental space, the first thing on your to-do list probably isn’t to purchase renters insurance; however, in an era when renters insurance policies costs less than a latte each month, why is it there are still around 70% of renters who do not have insurance? Likely because, as renters, we think it is the homeowners’ responsibility to cover any damages or burglaries that may occur. Here you would be wrong, which is why this month we are exploring the ins and outs of rental insurance.
Before we dive in, let me tell you a story that is close to home, literally. I used to share a duplex with my best friend. Sometimes she would forget to lock her side, and on a Tuesday in October someone walked in, grabbed her laptop, tablet, school bag with her class books in it, ransacked drawers, then took her brand new mountain bike and rode off. When she got home she panicked and called me. As I wasn’t home at the time, I didn’t see or hear anything. After speaking with our landlord, we realized that there was nothing she could do other than file a police report. The next day we both purchased renter insurance, but for her it was a day too late. Since she didn’t have insurance at the time, she was out thousands of dollars.
Now when we meet people moving into a new place, it is always the first thing she asks them: “Do you have renters insurance?” Then she will tell them what she learned that October. As I give you these tips, keep my friend in mind. She trusted her neighbors, but you never know what can happen where you live, and as the old saying goes, it is better to be safe than sorry (and lose thousands of dollars worth of valuable items that insurance would cover).
Let’s start at the beginning…
What is Renters Insurance?
In the most basic terms, renters insurance is a protection service for you and your belongings in your rental space. Along with loss or damage due to theft, fire, and/or vandalism, some types of water losses like when pipes burst and other perils. It can also cover temporary living expenses and certain medical and/or legal fees like if a visitor to your rental home is injured while visiting.
Common Reasons Renter Insurance is Necessary
Like many insurance policies, your coverage will apply to the people in your rental space who are related to you either by blood, marriage or adoption. Unless your roommate falls into this category, he or she should purchase his/her own policy if he/she wants to be covered.
While your landlord like has his own homeowners insurance, this has limited coverage. Most likely, their insurance will cover the structure of your rental space and any furnishings/appliances inside when you moved in. However, in the event of a burglary, a fire or flood, for example, rental insurance is needed to cover your, the renters, personal belongings.
In some cases, your parents may be your landlord. Again, if they have their own insurance policy that is helpful, but if you live with them you have the responsibility of making sure that they have enough coverage for your personal belongings as well as their own. In other words, you will be covered if you are living with their parents as they are family, but make sure that it is enough coverage for all of you.
Some people think that they do not have any personal items that they deem “worth covering,” but remember a few key items that people often lose in cases of fire, flood, burglary, and/or vandalism: cell phone, laptop, expensive gaming equipment, sports equipment, bicycle, etc.
Renters insurance is one of the most affordable types of policies; many of these policies can start from as little as $5 a month!
Think renters insurance is hard to get (or takes a long time)? Think again. In some cases, you can get covered in less time than it just took you to read these myths!
What does Renters Insurance Cover?
Standard policies cover named perils – bad things that may happen to your stuff, ie fire, lightning, windstorm, hail, smoke, vandalism, theft, freezing, damage from aircraft or vehicles, and riots, to name a few.
So, if someone breaks in and steals your laptop, you are covered. Just keep in mind that if the stuff in your apartment belongs to your landlord, it isn’t covered under your policy.
You can also add extra coverage for valuable items such as fine art, expensive jewelry, watches, electronics, and more.
Picture this: You walk into a cafe, put your stuff down at a table to save your spot, and go to the counter to order. When your coffee is ready, you turn to go back to your table and notice your backpack is gone, along with your phone, laptop, and headphones. In your surprise, you accidentally spill your piping hot double espresso on a bystander’s laptop. Here’s the upside: if you have renters insurance, both your stuff and the damage you caused to the bystander’s laptop will be covered, in most cases. Yes, even though you weren’t in your rental space!
Exceptions: Floods are not covered. Same goes for other natural disasters.
Temporary Living Expenses
Let’s say your oven catches fire and this forces you out of your apartment for a couple of nights. Where will you go? You may need to get a hotel, for example. This is a situation that your renters insurance policy will cover. Some may even cover the extra money you have to spend on food and laundry. Talk about saving the day!
Personal Liability & Medical Bills
That’s right, renters insurance coverage extends to legal fees and medical expenses. So if you are sued after a guest at your annual Friendsgiving slips on a spilled drink and breaks her wrist, your policy may cover the costs to get you out of this unfortunate predicament.
Or what if the earlier over fire spreads to your neighbor’s apartment and does damage there? They should be covered under your renters insurance policy. If your neighbor is VERYunhappy and decides to take you to court, your coverage will once again work in your favor to cover your legal fees.
What isn’t Covered by Renters Insurance?
A place to stay if your rental space becomes infested with bedbugs
Natural catastrophes such as floods and earthquakes, or man-made disasters such as terrorism, war, or a nuclear meltdown – these require either a separate policy or additional coverage
Rule of thumb: If it’s not a listed peril on your policy, it’s not covered.
How much Rental Insurance Coverage Should You Purchase?
When buying your renters insurance policy, you will need to decide what dollar amount you will want your insurance policy to cover; this is known as your coverage amount. This varies for each person and what they own, and it can also vary for each category (property, living expenses, & medical/legal costs).
For Personal Property, here are four steps that can help you save money:
Take a quick walk around your apartment, and inventory by taking a video of everything you care about
Make a list of your “big ticket items” and tell the video how much money they are worth
Create an estimate for bulk items such as clothes and kitchen items
Add all of this up to determine how much coverage you will need. We suggest rounding up to the nearest $10,000. For instance, if you have $17,000 worth of items, you should choose a personal property coverage amount of $20,000. If your estimate goes up as you make new purchases, you can adjust your coverage as needed.
Not a Homeowner, Protect Yourself with Renters Insurance
With all the information provided and a few examples of people who have been affected by not having renters insurance, I hope you will act today and secure a rental insurance policy or share this article with someone who may need to know more about the value renter insurance provides them and their immediate family. The cost is minimal compared to value of replacing stolen or damaged goods.
If you need to know more about exactly what you need, amount of coverage, cost, or getting a policy completed, contact a local insurance agency and talk with a trained professional. Dickey McCay Insurance is available if you don’t have one as they specialize in renters insurance. Don’t delay, call today!