How Does Renters Insurance Work

What Is Renters Insurance?

As a former insurance agent I would always offer renters insurance to clients, whose response would be “What Is Renters Insurance?” In this article I will explain how renters insurance works, how much it cost and why you should have it if you rent. Let’s take a look at how renters insurance works.

Renters insurance works like a homeowners policy, except renters only covers your personal property. Renters insurance will cover all of your clothes, furniture, electronics, tools, toys, appliances, etc. It will cover all your stuff for all perils. What is a Peril? It is any act or event that can damage or destroy your property, such as fire, busted water pipe, theft, vandalism, falling object, etc, you get the idea.

Now we know what renters insurance is and what it protects and protects against. Let’s look at a typical policy:

Contents: 10,000
Loss of use: 2,000
Liability: 100,000

In the example above the contents is what all your property is insured for in total. In this case we have everything insured for 10,000, so if you had a total loss due to a fire you would receive the 10,000 plus 2,000 for the loss of use. Loss of use is the amount you receive to live some where else if your apartment is in an unlivable condition. In this case you would receive 2,000 to find another apartment due to the fire destroying your apartment.

Now the liability will cover you if you were found liable in injuring someone else or damaging their property, even if it was on someone else’s property. All in all this policy works like a home insurance policy.

So why should you have it? When you rent a place to live weather it be an apartment or house, you are responsible for your property. If your neighbor starts a fire and destroys all his stuff and yours, if you have a renter’s policy you can go buy new stuff and have money to live on. Now vice versa, if a fire starts in your apartment and destroys your neighbors stuff, your liability will cover your neighbors stuff, and your contents will cover yours.

Now the important question, how much does a renters policy cost? A 10,000 contents renters policy will cost between 7-18 a month depending on where you live. Most companies give you the option to add content replacement cost. The replacement add on will cost between 3-8 extra a month, it is well worth the money. Replacement cost will give the value of the loss item at today’s cost, other wise you get the depreciated value.

So if you rent your residence I highly recommend you look in to getting a renters policy it could save you thousand in the long run. With renters you don’t have to worry about you being careful you have to worry about the whole complex being careful if you rent an apartment.

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