Many people seem to think that tenant insurance is required, but in itself tenant insurance is not legally mandatory, although it may be part of the terms of a tenancy agreement.
Although not required by your tenancy agreement, there are many valid reasons to purchase tenant insurance.
Tenant insurance is optional, and it can be difficult to change policy if you move a lot, but the options available are generally so affordable and the coverage so extensive that this type of insurance can be a very wise and responsible choice.
What does tenant insurance cover?
Here's what the tenant's insurance covers:
- The policyholder's personal holdings
- The policyholder's liability for damage or damage to property to others
- Medical expenses for others, regardless of fault
- Additional living expenses after the rent which forces the policyholder to live elsewhere temporarily
Types of tenant insurance
- Personal holdings
- Additional living expenses
There are two types of coverage for personal belongings:
- cash Value
- Replacement value
Actual cash value: The actual cash value of an item is the actual value of the item itself, including depreciation due to wear and tear over time.
Replacement value: The replacement value for the item is how much you would spend if you had to replace it, which can be significantly higher, as many items that people use regularly do not have much resale value. They would usually only be bought new and unused.
In addition to insuring your personal belongings, the tenant covers the policyholder against liability for damage or property damage caused by others.
This may include structural damage. to an apartment building where the tenant is responsible for damages. Although the landlord's insurance will probably be paid for damages first, they can recruit additional costs from you.
The tenants often also include some medical coverage without errors. This means that if a guest is injured in the policyholder's home, the tenant's insurance can cover part of their healthcare costs, regardless of errors.
Additional cost of living
A major benefit of tenants' insurance is coverage for additional housing
If damage occurs to your rent that requires you to find temporary housing elsewhere while repairs are completed, your insurance company can compensate you for that amount you spent in addition to your regular monthly expenses.
This may include hotel bills and meals. A common misconception is that a tenant's landlord helps cover these costs. This is usually not the case.
What is not covered by the tenant?
Even if an entire rental building is filled with only safe and careful tenants, there is never a guarantee against catastrophic storms, tornadoes or other natural disasters.
If you have a tenant insurance, especially an insurance that pays the compensation value of your property, you will not be distorted to start over from the beginning if your home is destroyed
If you chose a policy that pays the actual cash value for your possessions, you still have an advantage over being uninsured.
Earthquakes and Floods
However, not all types of natural disasters are covered by standard tenant insurance. In fact, two of the most common issues that people can face, earthquakes and floods, require separate insurance completely.
Second, in some places tenants may have more difficulty obtaining insurance, or they may receive higher premiums, especially those living on the coast and in areas exposed to wind or water damage from hurricanes.
For those who need it, separate earthquake and flood policies can be very beneficial, and for people living in areas more prone to disasters, the extra cost is probably a small price to pay for the increased risk you experience due to your location.
Are Renters Insurance Worth It?
Looking at it from a black and white perspective, yes, tenant insurance is worth it, and here's an example of why:
Let's say there's a fire in a tenant's apartment. The flames, combined with smoke damage, destroy almost all tenants' belongings.
In addition, the apartment needs to be repaired, so they have to find a new place to live next month until they can occupy the unit again
The tenant also discovers that they have been held responsible for triggering the accidental fire that damaged the building and their neighbors' property, and resulted in a hospital trip for his neighbor.
Without the tenant's insurance, all of this can fall on the tenant, who may be forced to pay all of these costs out of pocket.
Frequently Asked Questions About Rent Insurance
Does Tenant Insurance Cover Theft?
Yes, rental insurance covers theft after you have met your deductible amount.
Theft is a more likely scenario than the type of fire described above, and tenants generally have a higher risk of theft than homeowners. So while you may think that tenants can be beneficial in this regard, it may not be.
For example, if you are facing a burglary or other type of theft that is relatively small in scale, such as a stolen laptop or stereo laptop, you will probably have to pay less than your deductible to replace that item. In that situation, your tenants will not help you.
In addition, you have to buy separate floats for individual items, which increases the cost of your premium.
Does Every Roommate Need Tenant Insurance?
Some items in your rental unit may not be included in your policy. For example, if you have a roommate, their belongings would not be covered by your insurance, and there may be restrictions on buying tenant insurance with a roommate or unmarried domestic partner, depending on the insurance.
Does Tenant Insurance Cover Dog Injury?
Some dog breeds that are considered aggressive are also excluded from coverage in the tenant insurance. Check with each company about your dog's classification.
Do tenants cover car theft insurance?
Because tenant insurance covers almost all of your belongings, inside and outside your home, you may be surprised to learn that it does not. Do not cover what is probably the most expensive item you own.
Cars are covered separately by your car insurance. They are exposed to much more risk than most other items that you can own, and certain types of car insurance are already required by law for all drivers.
How to get tenant insurance
To get tenant insurance, the first thing you should do is create a proper home inventory. Make an overview of all your belongings and their value to determine how much coverage you need. Use this inventory to find out if you need to add any floats to your insurance.
Then decide how much you are willing to pay for your deductible. You should be able to pay that much in an emergency. If you can afford a higher deductible, you can get a cheaper insurance.
If you already have car insurance, see how much it would cost to add a tenant policy. This is usually a good way to get a new policy on favorable terms, and since you are already a customer, it is a good bet that you like their customer service. For most companies too, when you bundle your car and home insurance you get discounts.
When you get a quote, either from an insurance company where you already have insurance, from a trusted agent or directly from a new company, ask for discounts.
If it makes sense, do what you can to get these discounts before applying. You may need to install security systems or add deadbolts, but the cost can be offset by the reduction in your premiums and your home will be safer as a result.
* While doing our utmost to keep our site up to date, be aware that "current" information on this site, such as quotation estimates, or relevant company information, may only be accurate from the last day of editing. Huntley Wealth & Insurance Services and its representatives do not provide legal or tax advice. Please contact your own legal or tax advisor.