What's included in renter insurance?
A renter insurance policy is typically made up of three main components:
Coverage for your belongings.
Coverage to help while affected or displaced from an insured loss.
Coverage should you be sued by someone who visits your home, or lives in another unit.
Renter insurance for your belongings
Consider how much stuff you actually own and how much it would cost to replace in the event of a total loss like fire: there’s furniture, electronics, clothing, housewares, linens, sports equipment, silverware, china, and jewelry to name just a few. The cost to replace everything is often beyond the financial capability of most people. Even a less than total loss, like a burglary, can result in financial stress.
A typical renter insurance policy will protect all of your personal property from damage or theft.
Some items however, may be subject to exclusions or maximum limits, and if you want them covered you’ll have to add a floater or rider to the policy. Jewelry for example is covered, but up to a limit. Most tenant insurance policies have limits on certain items, and jewelry is one of them. This means that the maximum the insurer will pay is limited to the amount specified in the policy. Although the maximum will vary, a $5000 limit is not uncommon. The same may be true for really expensive bikes, or if you own a lot of expensive electronics. Read your policy carefully to determine your exact coverage.
Renter insurance for living expenses
If you're not able to live in your apartment while repairs are being made after an insured loss like fire, your renter insurance policy will help pay some of the expenses until you're able to move back in. Things like hotel bills, restaurant meals, and moving costs would normally be covered as they're living expenses you wouldn't typically have if you were living in your home.
Renter insurance for your liability
You may not own your home, but you still may be liable for damage you cause to your unit, the building, or the units of other residents in the building. For example, the damage caused by a kitchen fire may not be limited to your own unit, and you could be held responsible for the cost to repair other parts of the building. The same would be true if you left a faucet on causing water damage to your unit, as well as those beneath or beside you. There’s also the slip and fall. If someone wipes out in your unit and is hurt, you could be held liable for the costs associated with their medical expenses, rehab efforts, and time away from work.
What determines the cost of renters insurance?
Renter insurance costs will vary by insurance company. Usually your rental insurance premium is calculated based on how much coverage you need (the value of your contents for example, or the liability limit you choose), where you live, your claims history, your chosen deductible, and the type of building you live in.