Some renters think that a landlord’s property insurance policy is enough to cover damage, injury or loss. While a landlord’s property insurance covers losses or damage to the belongings of the landlord and the building itself, your personal properties as well as certain liabilities aren’t. If you are renting a place, whether an apartment, a condo, a house or a bedroom, getting a renters insurance is advisable.

What Is A Renters Insurance?

As a tenant or a renter, you will have to look and pay for a renters insurance so as to cover your personal belongings in case of damage or loss due to circumstances that apply to your insurance policy such as burglary, fire or hurricane. Such insurance could also cover medical expenses when you accidentally hurt or injure yourself within the property you are renting. A renters insurance is offered by many insurance companies and are often tailored to suit the distinct needs of renters. Unlike other kinds of insurance policies, a renters insurance costs relatively low as the average annual cost is only $180. However, prior to purchasing a renters insurance plan, you have to make certain that you know and understand what the policy covers as well as how it could protect you from the unexpected.

How Does It Work?

When you file a claim on your renters insurance, the insurer will have to carefully inspect the damage or loss and establish its the monetary value. If your insurance claim is approved, you could receive reimbursement in one or two means based on the structure of your policy:

  • Actual Cash Value. With the ACV method, you are given reimbursement after the age of every item covered is accounted for and discounted for the depreciation or devaluation that has transpired throughout the years to reduce its value. Typically, the ACV doesn’t go over or equate to the market value, however the premiums are likely to be much cheaper.
  • Replacement Cost Value. Unlike ACV, the RCV replaces your possessions or belongings with items that are similar to them and at their present market value. This means that depreciation, or wear and tear, isn’t a factor. But, RCV premiums are around 10% higher compared to ACV premiums.

What Are The Benefits?

Having a renters insurance plan is extremely crucial if you are renting a place to live as it covers certain common liabilities as well as provides you peace of mind in terms of finance. In the event that something does unfortunately happen your possessions, a renters insurance plan aids in covering the cost.

Those without renters insurance are almost certainly to pay for replacements or repairs for damaged items using their own money. This could be much more expensive and unaffordable compared to paying for a monthly or annual renters insurance that will cover these damages or loss.