Insurance Basics: Renters Insurance

If you're renting an apartment or home, you might assume you don't need insurance. But if any structural damage happens, you're responsible for your belongings.

When it comes to renting, there is a considerable risk to all of your personal belongings if you don't invest in renters insurance.

 

If you're a renter, it's paramount that you have renters insurance to replace your personal property. Relying on government services to cover them may leave you out in the cold. Some landlords may require you to have rental insurance as part of your agreement, while others may leave it up to the tenant’s discretion.^1,2

Overview of Renters Insurance

Renters insurance works much like a homeowners insurance policy. Renters insurance won't cover dwelling or structural damage but instead covers the cost to replace your belongings, loss-of-use coverage to your living space, and personal liability damages should someone get injured in your apartment. When one of these unexpected events occurs, you would file a claim with your renter’s insurance company and, depending on whether you have a deductible, be eligible to receive benefits after that is taken care of.^1,2

What Renters Insurance Covers

There are specific types of damage that renters insurance covers. You’ll want to read your policy carefully to ensure that your belongings are properly insured. Typical renters policies cover events like:

• Fire
• Smoke damage
• Falling objects
• Explosions
• Theft
• Riots
• Lightning and electrical damage
• Snow, sleet, and ice^1,2

What Renters Insurance Does Not Cover

There are specific events that your renters policy probably does not cover. However, if you live in an area affected by floods or earthquakes, for example, you should be able to add an endorsement at an extra cost that covers these events.

Renters insurance typically does not cover:

• Flood
• Earthquake
• Damage from pets
• Personal injuries
• Damage from pests
• Car damage
• Sinkholes
• Terrorism^1,2

Why Do You Need Renters Insurance?

There are many unexpected scenarios in which renters insurance will make your life easier. For example, if you accidentally leave your bathtub running and flood your downstairs neighbor's apartment, your landlord probably will not cover the damages. Paying for the repairs out of pocket can become quite costly and could be an additional financial burden to you.²

You also probably own more possessions than you think you do. If you take an inventory of everything you own and the price you paid for it, you'll quickly discover that you own quite a lot. Replacing electronics can become especially costly, and you don't want to have to pay out of pocket to replace everything. Your renters insurance will also cover more than a stolen TV. Should you have your laptop stolen while you're traveling, your renters insurance policy will also pay to replace it.²

Cost of Renters Insurance

One of the misconceptions about renter’s insurance is that it's too expensive to set up a policy. That couldn’t be further from the truth. The average cost of renter’s insurance is $168/year. If you can bundle your renters insurance with your auto insurance policy, you may receive a discount. Additional discounts may be provided if your apartment has smoke detectors, built-in sprinklers, and other safety measures.³

Regardless of whether your landlord requires renters insurance, it’s important to protect your valuables. For an average of just $14/month, you can get peace of mind should a disaster strike. For more information on insurance involving your estate, feel free to contact our team, California Retirement Advisors, at cradvisors.com, or call at 888-643-7472 to set up an appointment to speak with an experienced advisor.

By Christian Cordoba
CERTIFIED FINANCIAL PLANNER™
Founder, California Retirement Advisors