Do I need homeowner's insurance if I rent my home? - Renters Insurance

While you're unable to purchase a homeowner's insurance policy, unless you own the home, Renters Insurance is a great alternative! Similar to homeowner's coverage, renters insurance provides financial protection against the loss or destruction of your pos

July 11, 2008

Whether you're renting an apartment, a room or a house, you should seriously consider renter's insurance.

Similar to homeowner's coverage, renters insurance provides financial protection against the loss or destruction of your possessions when you rent a house or apartment. While your landlord may be sympathetic to a burglary you have experienced or a fire caused by your iron, destruction or loss of your possessions is not usually covered by your landlord's insurance.

The best part is, in most cases, renters insurance covers only the value of your belongings, not the physical building, so the premium is relatively inexpensive.

By purchasing renters insurance, your possessions are covered against losses from fire or smoke, lightning, vandalism, theft, explosion, windstorm and water damage (not including floods), just like with homeowner's insurance.

Renters insurance also provides coverage from a liability standpoint, to people injured at your home or elsewhere by you, a family member or your pet and pays legal defense costs if you are taken to court.

What's more, if you are unable to live in your apartment because of a fire or other covered peril, your renter's insurance policy will also provide coverage for additional living expenses, and may even reimburse you the difference between your additional living expenses and your normal living expenses.

When seeking renter's insurance, there are two types of policies to consider: Actual Cash Value and Replacement Cost coverage. Actual Cash Value will pay to replace your possessions minus a deduction for depreciation up to the limit of your policy, while Replacement Cost coverage pays the cost of replacing your possessions (without making a deduction for depreciation) up to the limit of your policy.

With either policy, you may want to consider purchasing additional coverage as well. A standard renters policy offers only limited coverage for items such as jewelry, silver, computers, etc. If you own property that exceeds the basic policy limits, it is recommended that you supplement your policy with a floater. A floater is a separate policy that provides additional insurance for your valuables and covers them for perils not included in your policy such as accidental loss.