What’s Rental Insurance and Why You Need It

Rental insurance offers protection on your furniture, clothing and personal items while you lease an apartment or home. Typically, the owner of the property will secure insurance to cover the structure, which leaves renters at risk for any damage to their belongings. Still, this important insurance policy is often overlooked. According to the Insurance Information Institute, 93 percent of homeowners surveyed had homeowners insurance in 2016, compared to only 41 percent of renters with a rental policy.

What’s Covered by a Rental Policy?

A rental policy generally covers the personal items you bring inside the house or apartment. The policy defines loss events such as a fire or theft, which are often referred to as named perils. When these events occur, you can file a claim for any damages or losses. Insured items may be covered at replacement cost or actual cash value. The value of replacement cost versus actual cost may differ by a large amount, so be sure that the policy you purchase provides adequate coverage. For example, an older television may only be worth 10 percent of the cost to purchase a new one. This means that on an actual costs basis, you’ll likely foot a majority of the bill to replace the old TV set you lost.

In addition to covering the value of your items, renters’ insurance also provides liability coverage for accidents that occur while you live in the home. And finally, alternate living expenses are also covered, should an event like a fire force you from the property on a temporary basis.

Is Rental Insurance Worth the Cost?

Renters’ insurance is relatively inexpensive and should fit easily into your monthly household budget. Like all insurance, it’s there to help you lessen your risk of financial loss. Without this important insurance policy, every item you own in the home or apartment would need to be replaced out of your own pocket. Although the risk of a fire or a burglary may be low, if it does happen, it’s comforting to know that you’ll have financial assistance to replace damaged items.

Do You Really Need a Rental Policy?

Typically, your lease agreement will stipulate the requirement for renters’ insurance. Landlords may list the minimum coverage required in the agreement, which is a contract between you and the landlord. Proof of a rental policy may also be requested before you’re granted access to the leased property.

Where to Purchase a Rental Policy

The best place to start when purchasing a rental policy is with your current insurance agent. If you already have auto insurance, your agent may be able to offer a multi-policy discount. That being said, you may still want to shop around for the best prices and compare what different policies offer to ensure you find one that best meets your needs. To make the process a little easier, you can request rental insurance quotes online or via telephone.

Before speaking to an agent about a rental policy, you should know the value of the property you wish to insure. You may wish to record an inventory of items as you box them up and plan your move. This will help you calculate the amount of coverage needed and ensure you’re not paying too much for insurance that you don’t need.

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