Renters Insurance FAQ: 7 Common Questions You Should Know

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  • Renters Insurance FAQ: 7 Common Questions You Should Know

For the average person, renters insurance may seem complicated. You may not know what kind of coverage you’ll need, how much coverage you should get, or even where to get a renters insurance policy. Fear not, our friend, we’ll break everything down for you.

1. What’s Included in My Renters Insurance?

While the types of coverage are relatively straightforward, there are many levels of coverage you can choose from that apply to your belongings and your livelihood. Sometimes, figuring out exactly how much coverage you need can be tricky. Renters insurance is broken down into four coverage categories: personal property, personal liability, medical payments to others and additional living expenses.

Personal Property Coverage

Personal property coverage is pretty straightforward. It covers your personal belongings — such as your clothes, furniture, electronics, jewelry and even bicycles — if they’re damaged, destroyed or stolen due to a covered peril.

Renters insurance policies typically start at $10,000 in coverage and go up to $200,000 or more. The way it works is by calculating how much value you have in personal belongings and getting insured to the same or similar amount. For instance, if all the belongings you own are in your rental home — such as a computer, furniture, TV, stereo system and clothes — and they have a combined value of $10,000, you only need $10,000 in personal property coverage.

However, if you have all of the previously listed items and then purchase more electronics worth $3,000, you may want to consider bumping up your coverage. If all your property is destroyed by a covered peril, you’ll still receive $10,000 maximum even though you had $13,000 worth of items.

It’s also important to note that certain high-value items, like specialized computers or jewelry max out on a per-item basis per claim filed. Jewelry, for example, usually pays up to $2,500 per claim. So if you have a piece of jewelry worth $4,000, you’d need to schedule it with your insurer.

Liability Coverage

Liability coverage is designed to pay for major medical bills and lawsuits if someone is injured on your property and you’re found liable or your dog bites someone. It can also help pay for damage you cause to someone else’s property.

All home insurance policies usually come with at least $100,000 worth of liability coverage, but you can add more if you need it. If you rent a house and that house has a pool or another attractive nuisance on the property, you may want to opt for more liability coverage in case someone is injured. Injuries caused by attractive nuisances almost always fall on the fault of the resident of the home.

So let’s say someone accidentally slips and falls while running around your pool, breaking their ankle and arm while getting a concussion. Even though they shouldn’t have been running, the liability may fall on you. Your renters insurance liability coverage could pay up to $100,000 for their medical bills. If the injured party decided to sue you, your policy may also cover the cost to defend you as well.

But the combined cost of medical expenses and legal fees will only be covered up to a combined $100,000 per claim. If the medical bills are $70,000 because they need extensive surgery and the legal fees are $40,000, you’d likely have to pay the remaining $10,000 out of your own pocket.

Medical Payments Coverage

Medical payments coverage is similar to liability coverage, but it’s designed to pay for minor injuries that occur on your property — whether you’re at fault or not.

If your son’s friend breaks his ankle jumping on the trampoline in your backyard, you’re likely liable for the cost of his injuries. Let’s say an X-ray, cast and 12 weeks of physical therapy cost $5,000 and his parents either don’t have insurance or don’t feel as though they should pay for the injury. What happens now?

If you have $5,000 in medical payments coverage on your policy, his parents will file a claim against your insurance company and your insurance company will pay for the entire injury. However, if you only have $5,000 in medical payment coverage, you’re responsible for paying the remaining $5,000.

Additional Living Expenses Coverage

If your rental home is damaged by a covered peril and left uninhabitable, your renters insurance could come in and save the day in the form of additional living expenses coverage, which is also known as loss of use coverage. Depending on the type of policy you purchased, your insurance company may pay for additional living expenses you incur while you’re forced from your home. These expenses include hotel bills, other temporary housing, gas and food. Any perishable groceries that had to be discarded due to the peril are also covered.

It’s important to keep all receipts while you’re unable to live in your home. You will need to provide receipts to the insurance company to prove all expenses were incurred during the specified time you were unable to live in your rental home.

2. What’s the difference between Actual Cash Value and Replacement Cost?

There are two different levels of coverage that pertain specifically to your personal belongings after they’ve been damaged, destroyed or stolen due to a covered peril: Actual cash value and replacement cost coverage.

The first type is actual cash value coverage, which includes depreciation and other factors to pay you the amount each item was worth at the time of its theft, destruction or damage. It means that a computer you bought five years ago for $1,200 will not be paid out that amount by your insurance company. Sure, it may cost the same amount to buy a new computer, but its actual cash value is similar to the used price of each item.

The second type, replacement cost coverage, doesn’t factor in depreciation or any other external damages or defects. If it works, you’ll get the same amount you paid for it — no matter how old it is. That means the $1,200 five-year-old computer is still worth $1,200 on the day it was stolen, damaged or destroyed. But since you’ll always get more money with replacement cost coverage, it will also cost more in premiums each month.

3. What Kind of Damage Is Covered?

While some events, like burglaries, are covered the majority of the time, every situation is unique. It’s at the discretion of each insurance company whether it will pay for each claim.

  1. Vandalism
  2. Theft
  3. Frozen pipes
  4. Damage caused by vehicles
  5. Damage caused by aircraft
  6. Rioting or civil disturbances
  7. Fire or lightning
  8. Windstorm or hail, such as a hurricane or tornado
  9. Damage from smoke
  10. Damage caused by heating, air conditioning or plumbing
  11. Damage due to snow, ice or sleet
  12. Damage from water heater, including cracks, burns or tears
  13. Damage from electrical current, such as downed powerlines
  14. Explosions
  15. Falling objects
  16. Volcanic eruptions

4. What Does Each Coverage Protect?

Personal Property

  • Furniture
  • Clothes
  • Electronics
  • Jewelry
  • Sports equipment

Personal Liability

  • General medical bills
  • Surgery costs
  • Physical therapy visits
  • Lawyer fees
  • Court costs

Medical Payments

  • Minor medical bills
  • X-Rays
  • Medication
  • Physical therapy visits

Loss of Use

  • Monthly rent
  • Storage fees
  • Pet boarding
  • Food and eating out
  • Gas, tolls and parking

5. Is Renters Insurance Required?

No, by law, you’re not required to purchase renters insurance. However, your landlord can put an addendum in the lease agreement that requires you to purchase coverage. While requiring coverage is not a very common occurrence within leases, Oklahoma outlaws the practice and California, New York, Virginia and Oregon have moved to regulate the requirement.

6. Should I Get Renters Insurance?

Yes, you should get renters insurance. Renters insurance makes sure you’re covered in case you need it and it gives you peace of mind when you don’t need it. It’s better to have renters insurance and not need it than to need it and not have it.

7. How Do I Get Renters Insurance?

Getting renters insurance is a breeze with Clovered. All you need to do is fill out a few pieces of info about yourself and your living situation to get a free, fast and personalized renters insurance quote today.

Protect Your Belongings With Renters Insurance

Averaging just $12 per month, renters insurance can protect your belongings for the cost of a few cups of coffee.

The editorial content on Clovered’s website is meant to be informational material and should not be considered legal advice.

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