When you rent an apartment or a house, you might assume that everything related to insurance is your landlord’s responsibility. While it is true that the owner of the property is the one to insure it, it does not mean that your belongings will also be covered. Your landlord's insurance will only cover the outer property, i.e., the building and fixtures, leaving most of the things inside, such as your furniture and valuables, without coverage in the event of a disaster. 

While insurance can save a lot of trouble in case of a natural disaster, only 41 percent of renters have insurance (2016). If you think it is time to take the plunge and get insured or swap out your current policy, keep reading.

What Does Renters Insurance Cover?

While your landlord's insurance covers the property structure itself, including anything the landlord owns, it does not protect the renter’s property. This is where renters insurance (sometimes also known as tenant insurance) comes in. It includes three types of protection:

• Personal Property Coverage – In the event of damage or theft, your personal property, e.g., your furniture, clothing, and electronics, will be covered up to the limits of your policy.
• Liability Coverage – If you, your family members, or your pets are considered responsible for any damage to the landlord’s property or bodily injuries to people on that property, then you will be covered for any repairs, replacements, legal fees or medical bills you have to pay for. 
• Additional Living Expenses (ALE): If your residence is damaged in a way that it becomes uninhabitable, you will be covered for any additional living costs you normally would not have to pay for (e.g., hotel rooms and restaurant meals) for the duration of the repair. Most ALE policies have a spending limit and some of these policies have a time limit. 

Personal Property Coverage

When you decide to purchase personal property coverage, you need to estimate the total value of your belongings. One way to do that is to use a personal property calculator. Additionally, it is useful to create an inventory of all of your belongings at your rental place. Try to review your belongings at least once a year to correctly estimate the total value of your property whenever you need that information. 

When insuring personal items, there are two main types of coverage: actual cash value and replacement cost coverage. 

Actual cash value will cover the cost of your property at market value minus its devaluation. For example, a fridge that was bought three years ago will probably not be worth as much as at the time of the purchase. Since you are probably getting back less than what you paid for an item initially, actual cash value tends to be the cheaper coverage.

Replacement cost coverage, as the name suggests, will cover the cost of replacing an item irrespective of how much its value has depreciated over time. As a rule, choosing the replacement cost coverage will increase your insurance premiums. 

If you own expensive jewelry, antiques, or other collectibles, then even the replacement cost coverage might not cover their value. Make sure to bring that up with the insurance agent and if necessary, opt for additional insurance policies to ensure all your valuables are protected.

What Is Not Covered Under Renters Insurance?

As mentioned above, the structures and fixtures are typically covered by the landlord's insurance policy, whereas renters insurance covers the renter’s items and any damage that might result from their actions. However, that does not mean that the basic renters insurance policy will stand in every situation. Most renters insurance policies exclude damage from natural disasters, such as floods and earthquakes. To avoid another disaster in your wallet when a flood or earthquake hits, it is often necessary to obtain additional policies. If you are not sure whether you are covered, it is always a good idea to speak to your insurance agent. 

What if You Share a Rented Space?

If you have a roommate, you can decide to purchase separate coverage for your own property. When you and your roommate purchase different policies, then your coverage will only apply to your property and the same goes for your roommate. 

You could also share an insurance policy together with your roommate and potentially lower monthly bills. However, this could complicate things in the future, since your roommate’s claims will also be included on your record and when your roommate chooses to move out, it can cause financial disagreements.

How To Save Money On Renters Insurance

Contrary to popular belief, renters insurance is extremely cost-effective. The national average is just $187 a year, which amounts to around $15 per month. For most tenants, this is remarkably affordable. Despite the affordability, you can still save money if you compare the prices of different insurance policies and look for the best deal. 

Here is a list of tips to consider when looking for renters insurance:

• Secure your property – Anything you can do to secure your home and its contents could get you some discounts and result in a lower overall cost. E.g., adding burglar alarms and dead-bolt locks will reduce the risk of burglary and theft, which means that the insurance company will be more likely to reduce your insurance premiums. 
• Fire prevention – Installing a fire alarm is one of the easiest ways to not only protect your home, but also reduce the cost of your insurance. The next best things you can do are purchasing a fire extinguisher and quitting smoking (or continuing as a non-smoker).
• Bundles – If you already own auto insurance with a company, bundling the insurance policy with your renters insurance is an easy way to save money. However, double check to make sure it will not turn out to be more expensive than going with different providers.
• Shop around – No two providers calculate risk the same way. Therefore, getting quotes from different companies will help you find the best possible deal. We can help you with that.
• Increase your deductibles – Increasing your deductibles will naturally lead to a decrease in your premiums. However, make sure that you have enough money saved up in case of an emergency.
• Cash value or replacement value – By choosing the first option, you can save money, but remember that in the case of damage, you will need to cover the financial difference between the cash value and a replacement.

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