How Much Renters Insurance Do I Need?
You’ve found the absolutely perfect apartment to rent and the big moving day is coming up. Before you move all of your nice possessions into your new home, you need to buy renters insurance so it’s all replaceable if disaster strikes.
Plus, many landlords require renters insurance these days. You’ve researched insurance companies and found one that has the white-glove service you expect, plus the flexible options you need and you are filling out the paperwork. But wait — how much renters insurance coverage do you actually need?
Too little and you may not be able to replace all your belongings. Too much and you’ll pay a higher premium than necessary. So, if you are asking yourself “How much renters insurance do I need?” keep reading to find the answers.
Why You Need to Consider Renters Insurance
Not all landlords require renters to get special coverage. Therefore, before this guide can answer questions such as “How much renters insurance should I get?”, it is important to answer a more fundamental question: Why are rental policies so important in the first place?
The short answer is this policy helps protect both you and your property. Your landlord has a policy on the structure you rent, but that will not cover any of your items if they are lost or stolen. Similarly, your landlord’s policy does not offer any liability protection if someone gets hurt by something that is your fault. These are just some of the reasons new renters need to get insurance. If you want such protections, you will have to purchase a renters policy, too.
Understanding Coverage Types
What does renters insurance cover? Rental policies offer three primary types of coverage for your home. First, the policy will insure your personal property up to a certain limit. This can be helpful if you need to replace damaged or stolen items. As an added bonus, most policies extend such protections to what is inside your car, which is very convenient if, say, your laptop gets stolen while you are traveling.
The second major form of coverage is liability protection. If a guest is injured in your home and holds you liable, this policy will cover their medical bills and (if needed) your legal bills up to a certain limit. This protection also extends to your dog (including outside your home), meaning you will be covered if your pooch bites somebody on a walk or at the local dog park. Some breeds may not be covered, so ask your agent.
Finally, rental policies cover living costs if your rented home becomes uninhabitable. That means your hotel and other major expenses will be covered during this time.
Personal Property Coverage Essentials
Without renters insurance, you typically have no recourse if your personal property gets damaged or stolen. That can be particularly annoying when the item is something you depend on every single day, like that expensive laptop. Fortunately, once you get a rental policy, you can enjoy the peace of mind of knowing you’ll be able to replace your property quickly.
Most renters insurance policies have a deductible. The average is $500-$1,000, but you can adjust it up and down to see what makes the bottom line price and your cash balance align perfectly.
The Role of Liability Coverage in Protecting Renters
Liability coverage is arguably the most important part of rental policies. In a pinch, most of your personal property can be replaced. However, if someone takes you to court because they blame you for an injury, the costs have the potential to be much more exorbitant.
Even for someone financially secure, the out-of-pocket costs associated with a prolonged trial may become prohibitively expensive. The good news is a rental policy will cover your legal fees and the medical bills of the injured party up to a certain limit. In many cases, having the ability to pay for medical coverage for others can help prevent the lawsuit from happening in the first place.
Estimating Your Coverage Needs
Now that you know more about these policies, it is time to answer that burning question: “How much renters insurance coverage do I need?” While the exact figure may vary from home to home, there are a few rules of thumb you should follow.
For example, you first need to document the major items you want to cover and estimates of their current value. This will help you determine the amount of coverage you need. It is important to be accurate; this coverage represents your best shot at replacing your most valuable belongings if they are lost due to theft or damage.
Liability protection is the bigger part of any rental policy. Before you ask, “How much renters liability insurance do I need?” The correct answer is simple: You will need a minimum of $100,000 in personal liability coverage. That is typically enough to cover medical and legal bills in most situations.
Additional Coverage Considerations
The methods above are useful for determining how much renters insurance you need. However, you should consider other factors before finalizing a policy.
Depending on your carrier, you may discover some of the personal property you wish to protect (typically high-end items like jewelry or specialty items like coin collections) has limited protection. A separate rider might be necessary to fully protect these items.
Wondering if your renters insurance is enough to cover natural disaster damage? For example, what if a hurricane blows the roof off your apartment building and your belongings are damaged? In this case, the answer is likely yes — your possessions are covered. However, it is important to discuss this with your carrier to find out what disasters are and are not covered in your policy and to ask about additional riders for things like flooding.
Common Misconceptions About Renters Insurance
The biggest misconception about rental insurance is that you do not need it because your landlord’s policy will protect you. This is simply not true. Your landlord’s policy will protect the structure of the home you rent, but it will not do anything to protect your possessions or offer liability protection.
Another misconception is that most renters do not need liability coverage. It only takes a single accident (someone slipping on a toy at the top of your stairs or perhaps startling your dog and being bitten) to trigger a messy lawsuit.
Another common misconception among renters is that their belongings must be more expensive to warrant protection. The surprising truth is a typical renter has an average of $20,000 worth of private property. By taking inventory of your possessions, you can better understand the amount that best fits your needs.
Finally, many hold off on getting a policy because they fear it will be expensive. However, the average policy only costs about $215 per year, that’s a little more than 50 cents per day. When the costs are this low and the stakes are this high, renters need to realize a significant truth — simply put, they cannot afford to skip out on this vital protection.
Calculating an Adequate Amount of Coverage
While the techniques above are a great way to help you estimate how much protection you need, it is important to realize you do not need to complete these calculations on your own. Calculating these figures with a local insurance carrier is easier (and certainly recommended).
If you are considering getting coverage, now is the perfect time to get online quotes from a variety of carriers. This will help you discover where you can find the best premium. From there, you can initiate a direct conversation with an agent about how much protection is enough for you and your family.
Covering Your Rental with the Best Renters Insurance
Now that you know how much renters insurance you need, do you know where to find insurance agents who care about your belongings as much as you do?
At InsureOne, we are devoted to top-tier customer service for clients just like you. Once you are ready to get serious about protecting your belongings, it is time to get a quote online. Of course, you can also pick up the phone and give us a quick call at 800-836-2240. Finally, feel free to visit an InsureOne office near you.