Living in a rental property has many benefits, and almost one-third of Americans are currently living in an apartment, rental home, or condo.
Some of the benefits of renting a home include location Independence which enables you to move wherever you want after your lease is up, saving money for a down payment on a home, or providing financial freedom if you are not interested in owning a home and paying for maintenance.
However, renting comes with a unique set of financial challenges if anything goes awry on the property. All landlords have homeowners policies that will reimburse them for damages caused to the building or home; the homeowners’ policy usually does not extend to tenants or tenant property.
Today, we will discuss some of the top benefits and 7 main reasons renters should consider purchasing a rental insurance policy.
How Renter’s Insurance Works
Renters insurance is different from homeowners insurance because it explicitly covers tenants and their property instead of the landlord and the building itself.
This is an essential differentiation because some people assume that it extends to them because the landlord has a homeowner’s policy, but this is not true.
Rental insurance policies generally cover liabilities for legal and medical expenses incurred by guests who do not live on the property, reimbursing damaged, broken, or stolen property. They will even reimburse for the cost of temporary housing if the rental home or apartment becomes uninhabitable.
Many different insurance providers offer rental insurance policies to allow policyholders to bundle with other insurance such as auto policies. The benefit of bundling your policies with one Insurance carrier is that you will generally receive a discount for having multiple policies with one insurance provider.
Top Reasons To Purchase Renter’s Insurance
As you can see, renters insurance is different from homeowners insurance because it explicitly insures tenants in their property instead of the landlord and homeowner.
Below are the top seven reasons to consider purchasing a rental insurance policy and how they may protect you from a financial catastrophe.
- Protects Your Property From A Wide Range Of Perils
Renter’s policy covers an immense array of different parallels you may incur or experience while renting a home from somebody else.
Some of these perils include smoke, vandalism, volcanic eruptions, damage caused by Vehicles, caused by aircraft, explosions, falling objects, fire, lightning, damage from water, and even damage caused by riots and civil disturbances.
Renter’s insurance covers even more than these damages listed; hopefully, you understand that a renter’s policy is very powerful and covers an extensive range of potential damages.
- Provides Liability Coverage
If your dog bites somebody and they require medical attention, somebody sues you, or if somebody slips and falls and needs to go to the hospital while at your rented home, you could be on the hook for their legal and medical bills.
These expenses can easily be in the tens of thousands of dollars, with dog bites sometimes incurring $30,000 worth of medical and legal expenses.
Instead of paying $30,000 out of pocket or borrowing to cover the difference, renters insurance will step in and payout up to the policy maximum, which could be the entire amount.
Since rental insurance policies can range from $150 to $300 per year, one claim could easily pay for over a century’s worth of premiums.
- Landlord Requirements
Another reason to consider rental insurance is that many landlords require their tenants to purchase renter’s insurance policies so that they are not liable for damages incurred by tenants, guests, or children that may be on the premises.
Although you could try to ignore your landlord requirements, it is usually best to follow the stipulations of your lease and purchase a rental insurance policy to ensure that you are in compliance with their terms and you are protected from excess litigation in the event of damage or injury.
- Emergency Living Expense Coverage
Sometimes a rental home can become uninhabitable due to a variety of events such as fire, tornadoes, or water damage. Although your landlord is not required to have a backup home for you to live in while your rental home is being prepared, rental insurance policies generally have a component where they will reimburse you for the cost of living in a secondary home if your primary rental home becomes uninhabitable.
- Extends Coverage To Your Property When You Travel
Rental insurance primarily protects your rental home and your property. However, a little-known benefit of rental insurance is that it extends to your property even if you travel abroad.
If you experience a covered loss while traveling, such as theft, destruction of your property, or something else that causes you to lose your personal belongings, you can file a claim with your rental insurance provider, and they will reimburse you for the value of your items even though you are traveling.
- Receive Discounts On Other Policies
Rental insurance policies can range from $150 a year to $300 per year or more. Even though rental insurance policies are relatively affordable, it’s best to always try and save money where you can.
Thankfully, many insurance providers offer bundle discounts to their policyholders in an effort to increase their business and Foster loyalty. If you are purchasing a new rental insurance policy, ask your auto insurance provider if they offer discounts for having multiple policies with them.
You may be surprised by what they say and get access to a significant discount for bundling your auto and rental insurance policies together.
- Immense Risk/Reward Benefit
The final reason you should strongly consider a rental insurance policy if you are renting a model is that they’re one of these highest payout-to-premium policies on the market.
For example, suppose your rental insurance policy costs $200 per year and you file a claim for a lawsuit or personal injury liability on your rental property and pay out $30,000. In that case, it will have paid for your annual premium for the next 150 years.
Although you might not be living in the same rental apartment 150 years from now, this is a powerful example of why renters insurance policies can be a great way to protect you and your property while you are renting.
Hopefully, you can see some of these benefits and how they can apply to you as a renter. If you have more questions about how rental policies work or want to research some of the top rental insurance providers, check out our other reviews and guides so you can see for yourself how much money you can save with a rental insurance policy.
* This content is not provided by the financial institution or the offer’s provider. Any opinions, analyses, reviews or recommendations expressed here are those of the author’s alone, and does not constitute a financial or expert advice.