As a property renter, you need insurance to protect yourself and your belongings from unexpected and accidental loss. Renters insurance can do that for you. This policy protects you from losses like fires and theft and provides liability insurance. Here is what you need to know about this coverage.

The Basics of Rental Insurance

Renter's insurance is sometimes a requirement of a rental agreement. Even if it is not, this insurance policy is often valuable. It helps to protect you, the renter, from losses. Your landlord will have property insurance on the building, which only protects the landlord and their belongings. It does not protect what is yours. That means that if there is a fire, the landlord's policy does not cover your losses but only covers the losses that the landlord suffered, leaving you with nothing.

There are several components to this coverage. You can select a policy that fits your needs based on value and other factors.

Personal Property Coverage

Most renters insurance policies include personal property coverage. This coverage protects you if your belongings are damaged or lost due to specific incidents, known as "perils," covered by the policy. Typical perils covered by renters insurance include fires, theft, and vandalism committed by someone who doesn't live in your home. Personal property insurance compensates you for physical belongings lost in these situations, such as your home's furnishings, computers, and other physical possessions.

Liability Coverage

Liability insurance is a type of protection that provides you with financial support in cases where someone else suffers a loss that you are responsible for. For example, the neighborhood child may come to visit you, fall and suffer an injury. Your liability insurance could help cover that child's medical bills or other claims made against you. You may be liable for those losses if someone gets hurt within your unit.

Additional Living Expenses

In some situations, you may have to leave your rented property so that covered repairs get made. For example, if a fire occurs, you may be displaced while they repair the property. During that time, you would have to pay for another location. The additional living expense is a rental insurance component that helps cover those added costs. It only applies when you are in a situation where the renter's insurance covers your losses (a covered peril).

Determining Your Coverage Needs

When considering renters insurance, a common question is how much coverage is needed. Here are some factors to consider when making this decision:

• Value of Possessions: Assess the value of what you own. The more valuable your possessions, the higher your coverage requirements will be. However, excessive coverage beyond your belongings' value won't provide additional benefits.
• High-Value Items: If you have specific, high-value items, you may need a special rider or a unique type of insurance to ensure those are adequately covered.
• Liability Insurance: Determining the right amount of liability insurance can be complex, as predicting potential incidents is difficult. Your renter's insurance company can provide guidance and suggestions based on the types of claims typically paid out in your area.

Careful consideration of these factors will help you choose the appropriate amount of renters insurance for your situation.

Understanding Policy Terms and Exclusions

Always take the time to read the renter's insurance policy. You should know all of the details regarding it, including any restrictions on access and anything that could void the contract. For example, the policy's terms and exclusions will include:

• Specific types of applicable perils to the policy or when the insurance will cover your losses.
• The specific types of perils expressly excluded or instances in which you do not have coverage.
• Information about how to file a claim.
• Costs, policy maintenance requirements, and rules about making timely payments.
• Restrictions on who causes the damage; for example, if someone living in your home causes damage to the property, it may not be covered.
• Steps to filing a claim with the policy.

Shopping for Renter's Insurance

Numerous companies provide renter's insurance. Typically, it will be available from the same insurance companies that offer homeowner's insurance in your area. You should be able to obtain a free quote for coverage. That should allow you to compare several policies to determine which offers you the best level of protection at the most affordable price.

When comparing policies, be sure to consider the following:

• Available policies for your area and the coverage amount you need.
• The exclusions and limitations of the policy.
• Costs and fees associated with the policy.
• The company's financial rating.
• Find discounts, such as bundling your renter's insurance with your car insurance.

Read reviews from providers online. Gather insight into the policy's features. Then make a wise decision.

Renter's Insurance and Your Lease

When signing your lease agreement, determine if your landlord requires renter's insurance. In some cases, it will be a requirement of your contract. Other times, it is only recommended and not required.

Takeaways

• Renter's insurance protects you from losses not covered by the property owner's insurance policy.
• You choose a policy based on your coverage needs and goals, but read the conditions and terms to know the limitations.
• Renter's insurance can cover your personal property, liability risks, and additional living expenses during a covered need.