Your Guide to Renter’s Insurance

If you rent an apartment, you may have heard of renter’s insurance, and you likely have some questions. With the litigious American society coupled with insurance law, many landlords are now requiring this from their tenants. Let’s dive into the benefits, cost, etc., so that you are well informed on your insurance journey.

What is renter’s insurance?

Bedroom covered by renter's insurance.

Renter’s insurance is an insurance policy you, the tenant, purchase when moving into a property that you do not own. Coverage within this type of policy does not include coverage for the building (dwelling) since it is owned by the landlord. Compared to other policies such as auto or life insurance, renter’s insurance is very inexpensive and offers more coverage than you might expect.

What are the benefits?

A standard renter’s insurance policy includes Personal Liability Coverage, Medical Payments to Others (MedPay), Personal Property Coverage, and Loss of Use. You may even be able to purchase additional coverages that fit your needs, such as special coverage for an engagement ring, so it is important to have a conversation with your agent about your needs. Each of the previously mentioned coverages has its benefits that make a renter’s policy well-rounded and a great investment.

Personal Liability: coverage for legal costs and damages that result from property damage or bodily injury that the policyholder (the insured or named insured) is responsible for.

MedPay: coverage for medical expenses that result from an injury to a non-policyholder that is caused by the insured or occurs on their property.

Personal Property: coverage for items owned by the insured that may become lost or damaged due to a covered claim. Certain personal items may not be included, it is important to discuss your belongings with your agent.

Loss of Use: coverage for housing costs should your residence become uninhabitable by way of a covered claim.

Examples of potential claims:

  • Fire loss
  • Smoke damage (either from within or outside the dwelling)
  • A leak that damages the dwelling or personal property
  • The insured’s pet injures a guest
  • An acquaintance falls in your dwelling and sues you
  • Maintenance that makes the dwelling uninhabitable

What are a deductible and a premium?

When it comes to insurance there is a lot of jargon that can be very confusing. In this section we will go over some of the important wording you will hear and see as you are navigating this process. Understanding what you hear and read, regardless of the type of policy, is critical to ensuring that you are protected and prepared in the case of a loss.

Deductible: the amount you pay if there is a claim, this is determined when purchasing your policy.

Premium: the purchase price of your policy, for renter’s policies this is typically paid annually.

Peril: the cause of a claim such as fire, lightning, smoke, etc.

How much does renter’s insurance cost?

The average cost for a renter’s policy in the state of Maine is around $125 per year. Yes, per year! That is about the cost of one quick lunch a month. Some things can affect this cost, such as credit history, insurance collections, eviction history, location, and more. Just like with any other insurance, it is a good idea to shop for the lowest price once you have established good credit, payment, and rental history, or every two to three years, as the insurance market shifts. Note: most policies are very similar, but as with anything else, cheaper is not always better, be sure to read your policy documents and ask questions.

Other Tips

It is vital that you read your policy documents before signing. Covered perils are often limited, and what you may expect to have covered actually is not. Your policy documents will also list exclusions (non-covered perils). These often include things like intentional damage or harm, government seizure, nuclear hazard, war, etc.

Woman researching renter's insurance on her computer.

Ask questions. If you are unsure about the language in your policy, ask your agent to explain. Insurance agents (generally) enjoy helping clients understand their coverage.

Keep track of your belongings. Many insurance companies will want proof of the items that need to be replaced at the time of a loss. The best way to keep track of your personal property is by photographing each item as you purchase it or move in. This is also a great way to see if the personal property coverage in your policy meets your needs.

This is a good purchase, even if it is not required by the property owner.

If you are not sure where to purchase a policy, speak with the property owner as they may have a recommendation.

In summary…

Renter’s insurance provides a value far above its actual cost. Unfortunately, no one knows when a claim might happen. But when a peril occurs, you will be grateful that your small investment has protected you, your guests, and your belongings.

Written by Jennifer Williams, a licensed insurance agent in the State of Maine and Assistant Property Manager for Tenant Solutions, LLC. This is NOT a comprehensive list of all perils, coverages, exclusions, and information. Read your policy carefully and speak with your agent regarding any questions or concerns.

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