Renters Insurance Made Simple

May 6, 2013

renters insuranceMany people like the idea of renting an apartment because it doesn’t require the same responsibilities as owning and maintaining a house. If a pipe bursts or the dishwasher suddenly breaks, for instance, all you have to do is call the landlord and he’ll fix it or hire someone to do the job. As a renter, your responsibilities are limited, right?

Not so fast. According to the U.S. Census Bureau, U.S. rental occupancy rates are on the rise. At the same time, though, only 45 percent of U.S. renters have a renters insurance policy to protect their possessions, according to a recent Allstate Insurance survey.

But, did you know that if something unexpected occurs at your residence–fire, theft, or storm damage, for example–your landlord’s insurance would only cover the cost of the structural damage to the building, not your personal belongings?

Given that the average renter owns roughly $30,000 worth of possessions, according to the survey, that type of loss can clearly be devastating.

How Does Renters Insurance Work?

For many people, purchasing renters insurance can be a relatively simple way to minimize that risk.

Most people understand that renters insurance can help cover the loss of their stuff–things like furniture, clothing and electronics–in the event that they’re damaged or destroyed by certain causes, which often include perils like fire, theft and vandalism, depending on your policy. That’s called Personal Property Coverage.

But did you know that Personal Property Coverage can even help protect your things if you’re away from home under certain circumstances–if your laptop is stolen from a hotel room or your car, for instance?

Deductibles

Another thing to know about renters insurance is that, before your insurer helps pay to cover your loss, you’ll be responsible for covering a set dollar amount toward the damages; that’s known as a deductible. So, if you need to file a claim for a covered loss, you’ll be responsible for paying the deductible first.

For example, if a kitchen fire causes $3,000 worth of damage, and your deductible is set at $500, you will be responsible for paying the $500 deductible and the insurance policy will pay for remaining damages, up to your policy limits (some categories of personal property have a maximum dollar limit that the policy will pay; within these categories, they may also be a limit for an individual item.)

Three Types of Additional Protection

Beyond Personal Property Coverage, renters insurance can also include broader types of coverage, like Additional Living Expenses, Family Liability Protection and Guest Medical Protection.

  • If you’re displaced from your apartment because it is damaged by a loss that’s covered by your insurance policy, then Additional Living Expenses coverage would help reimburse you for reasonable additional expenses, such as if you need to rent another apartment, for example, or stay at a hotel for an extended period of time.
  • If you are legally obligated to pay for a person’s injuries, or damage to another person’s property, Family Liability Protection can help safeguard you against financial loss. For example, if you are sued after a guest takes a serious fall on your steps, this type of coverage may help.
  • Guest Medical Coverage can help you pay for reasonable medical bills if a person is injured at your residence.

With a landlord taking care of many of the responsibilities of your apartment, it can be easy to forget that unforeseen circumstances can still occur, and that you can suffer a personal and potentially great loss. But it’s good to know that there’s a relatively easy fix. A rental insurance policy can cost as little as $15 a month, and you can chip away at that monthly cost further by bundling it with another policy, like auto insurance. At the end of the day, it’s a responsibility that you might not mind taking on.

This post comes from the editors of The Allstate Blog, which helps people prepare for the unpredictability of life.

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