Renters Insurance

Renters often assume that damage to their property in their rental home will be covered by their landlord's insurance policy, which isn't the case. And some renters assume they don't own enough valuables to make buying insurance coverage worthwhile, not realizing that the cost of replacing clothing, furniture, computers, TVs and books can easily add up to thousands of dollars.

Renters insurance, like homeowners insurance, helps protect against losses from theft, fire, lightning, vandalism, windstorms and water damage from broken water pipes. In addition, if your rental home becomes temporarily uninhabitable, your renters policy can typically help address some of the costs for you to temporarily live elsewhere that are over and above your normal expenses.

> Important Renters Insurance Factors To Consider

Actual Cash Value vs. Full Replacement

With actual cash value coverage, insurers depreciate lost or damaged items based on their age. For example, if you owned a 5-year old TV that was stolen, the actual cash value would be the cost of buying a used TV of comparable age and condition. If your policy covered your TV at full-replacement value, your insurer would pay based on the cost of a new TV of the same quality without applying depreciation.

Renters Liability Coverage

Renters insurance can cover you from claims stemming from allegations of negligence. Like homeowners insurance, renters policies cover your liability for injuries or property damage that you, your family members, or your pets may cause to others.

For example, if a guest at your home slipped and fell, you could be held financially liable for their injuries. In this case, the liability section of a renters policy would pay for your legal damages, up to your policy limits, if you are found to be negligent and caused the injury. In this situation, the policy would also pay for your legal defense.

How Much Will Your Renters Policy Cost?

Considering the broad protection they offer, renters insurance policies are relatively inexpensive. The cost is low because renters don't need to buy insurance to protect their homes, only the contents.