Many landlords and tenants are confused about renter’s insurance. They may not know what it is or how it works.
It’s not uncommon for a landlord to require tenants to carry renter’s insurance, and for good reason. Understanding what renter’s insurance is and how it works goes a long way to understanding why it’s so important. Here’s your complete guide to renters insurance.
What is Renter’s Insurance and What Does it Cover?
Renter’s insurance is an insurance policy designed to cover items owned by the tenant, such as furniture, electronics, clothing, and other items. The insurance policy usually covers instances, such as fire, weather-related damage, vandalism, theft, water damage from plumbing issues, and electrical malfunctions.
It’s even possible for a standard renter’s insurance policy to cover other odd things, such as damage caused by hail, a riot, an explosion, volcanoes, and many other odd instances.
Along with odd events, renter’s insurance may also cover these odd things:
- Spoiled food – During a power outage, the policy may cover spoiled food.
- Dog bites – If a tenant’s dog bites someone, it may be covered with some bread restrictions.
- Relocation – If a tenant relocated due to damage caused to the home, renter’s insurance may cover some of the costs.
- Death – An accidental death of someone on the property may be covered by renter’s insurance up to the policy limits.
In addition, renter’s insurance may also provide some coverage for temporary housing, if the unit becomes uninhabitable due to one of the issues listed above, such as fire or a weather-related event. It may even cover the contents of your luggage while traveling or your car.
A renter’s insurance policy may also include some liability coverage. It a tenant is sued due to an injury or damage occurring at their home, this coverage will help pay any court judgments and legal expenses.
A few things to note about renter’s insurance include:
- It’s much like a homeowner’s insurance policy, but for those renting or leading the home or apartment where they live
- An average tenant’s belongings are worth about $30,000.
- It’s important to take and maintain a full inventory of your possessions, as the tenant, when using renter’s insurance
- Renter’s insurance comes in two main types – replacement value and actual cash value. Replacement value will pay to replace your items, while actual cash value will pay the worth of the items when they were damaged.
What isn’t Covered by Renter’s Insurance?
While renter’s insurance covers many things, it doesn’t cover everything. There are some types of events where a tenant won’t be covered, even with the best renter’s insurance policy. Some of these things can be covered for an additional premium, however.
Events considered “acts of God” are not usually covered, such as earthquakes and floods. In addition, a backup of sewage into the home may not be covered automatically by a renter’s insurance policy. If these events pose a risk to the area where a tenant lives, it’s a good idea to pay the extra premium for the coverage through a rider.
Also, renter’s insurance may not provide enough coverage for unusually expensive or valuable items, such as fine jewelry, musical instruments, art, antiques, or high-end electronics. Purchasing a separate rider for these items may be necessary to provide full coverage.
Tenants must also have an inventory of the items they own, such as computers, furniture, and valuables. Renter’s insurance won’t cover undocumented items. It’s a good idea to keep receipts and a digital record to ensure the policy will cover the items during a disaster.
Renter’s insurance will also not provide coverage for losses caused by intentional acts or the tenant’s own negligence.
Should Landlords Require Renter’s Insurance?
The simple answer is YES! Landlords should always require tenants to carry renter’s insurance to ensure they are protected. This helps to avoid any disputes is something does happen and the tenant thinks the landlord should have them covered or pay for their lost belongings.
At Suncoast Property Management, we help landlords with all their property management including deciding to require renter’s insurance. Our team will advise you on the best options and help make it easy for you and your tenants to gain the necessary coverage.