Is tenant insurance worth it? (2022)
Some renters assume that because they don’t own their home, they don’t need home insurance. While it’s true that you can’t get home insurance as a tenant, you can and probably should get tenant insurance. In fact, some landlords require it as a condition of the lease.
In addition to examining the best tenant insuranceWe at Home Media’s review team have compiled a guide to what a renter’s policy does and does not cover, whether renter’s insurance is required and what the alternative is.
What does renters insurance cover?
Renters insurance covers personal effects that are damaged, stolen, lost or destroyed by a covered event. He can pay either the actual cash value (ACV) of these items or the full replacement cost, depending on the policy. ACV coverage takes depreciation into account, while Replacement Cost Value (RCV) coverage does not deduct depreciation.
Common perils covered by tenant insurance include theft, vandalism, fire, smoke, explosion, lightning, wind, hail, falling objects, and cave-ins due to ice or snow. Mold and water damage may also be covered, depending on the terms of your policy.
In addition to the personal property coverage described above, a the renters insurance policy covers what follows:
- Additional living expenses (loss of use): If a covered peril makes your home uninhabitable, your living expenses may temporarily increase. Renters insurance will help cover these additional expenses, such as hotel rooms and take-out meals.
- Personal responsibility: You may be held liable for bodily injury or property damage occurring in your home. A renters policy will help cover the costs associated with these accidents.
- Medical payments: If a guest is injured in your home, your tenant insurance will help pay for their medical expenses up to a predetermined amount.
Most companies offer additional coverage options, also called endorsements or add-ons, to cover items or risks that would otherwise be excluded. You can also adjust your coverage limits to ensure comprehensive protection.
What does renters insurance not cover?
All insurance policies have certain limitations and exclusions. When evaluating a tenant’s insurance policy, there are two main things to consider: the list of named or excluded perils and the coverage limits.
Risks not covered
Your tenant’s insurance policy documents will tell you what risks the policy does or does not cover. A named perils policy lists the perils it covers and excludes everything else, while an all perils policy lists the perils it excludes and covers everything else.
Most renters insurance policies do not cover damage caused by the following:
A policy’s coverage limits determine how much renters insurance will pay for different items or situations. Your tenants policy will have both an overall limit and sub-limits for individual items or categories. If the cost of your claim exceeds your policy limits, you will need to make up the difference, so make sure the coverage amounts match the value of your belongings.
Tenant insurance is intended to cover the personal effects of the policyholder. This means it will cover the contents of your home, but not the structure. Only the owner can insure the building and all structural elements or common areas. Although renters insurance may cover personal effects that are stolen or damaged while in your car, it does not cover the car itself. Also, it won’t cover your roommate’s belongings unless their name is also on the policy.
Why should I buy tenant insurance?
Renters insurance can save you money in the event of an accident, theft or natural disaster. Here are some reasons to consider tenant insurance:
- It’s surprisingly affordable. Compared to other policies, such as home insurance, tenant insurance is a bargain. Lemonade offers some of cheapest renters insurance policies with prices as low as $5 per month depending on your location, age of the property, and other factors.
- It costs less than replacing your belongings. The cost of replacing your belongings after an accident, disaster or theft will cost far more than what you would spend on renters insurance.
- He can pay medical and legal expenses. The liability insurance included in your renter’s policy will help pay for medical and legal expenses you may face after someone else is injured on your property.
- It can help you save on car insurance. Most insurance companies offer a multi-policy discount for those who bundle their auto insurance with renter’s insurance.
- It often pays off. With generous multi-policy discounts, you may be able to add renter’s insurance without seeing a change in your insurance premium.
- It protects your savings. After a covered event, your renter’s insurance policy will help pay for expenses that might otherwise drain your savings account.
- It may be required by your landlord. Some landlords require their tenants to purchase a tenant’s insurance policy as a condition of their rental agreement.
To find the best deal, we recommend that you collect renters insurance quotes from several companies. If you have auto insurance, checking to see if that provider also offers renters insurance is a good place to start. You can also ask about bundled discounts when you get renters insurance quotes to compare.
Is tenant insurance compulsory?
Most states require drivers to carry auto insurance, and mortgage lenders require borrowers to carry home insurance — but what about renters insurance?
Although renters insurance is not required by state or federal law, it may be required by the terms of your lease. Many landlords require their tenants to take out tenant insurance. This requirement can help landlords and their tenants avoid costly litigation when a tenant’s property is lost, stolen, damaged or destroyed.
Above all, having tenant insurance protects you, the tenant. Even if your landlord has insurance, you will be responsible for your own property. Your landlord’s insurance is supposed to cover the building itself and property belonging to the landlord. It may also include liability protection for accidents that occur on the property. However, it will not cover your personal effects.
What is the alternative to tenant insurance?
The alternative to tenant insurance is an emergency savings fund. Instead of paying a company to insure your belongings, you set aside enough money to cover them yourself.
While skipping your renter’s insurance premium might seem like a way to cut expenses, be sure to crunch the numbers before you choose to forgo it. You can take inventory of your belongings and calculate how much it would cost to replace them if you lost all of your belongings to fire, flood or theft.
If you don’t have enough emergency savings to replace your belongings to your satisfaction, you may not have a viable alternative to renters insurance.
The Bottom Line: Is Renters Insurance Worth It?
Renters insurance coverage is almost always worth it. It is much more affordable than other policies, including home or auto insurance, and provides valuable financial protection. Even if you can save enough money to cover unexpected losses, renters insurance can be worth it. For a relatively low monthly cost, you can provide coverage for all your belongings and liability protection if someone is injured on your rental property.
If you already have a car or other insurance policy, you can save money by bundling it with renter’s insurance, which will make it even more affordable. Comparing renters insurance quotes from two or three different insurance companies will help you find the best deal.