Is renter’s insurance mandatory? Some types of insurance are required by law — renter’s insurance is not one of those types. But just because you don’t have to have it, doesn’t mean you shouldn’t seriously consider getting it. In this blog, we’ll explore the importance of renter’s insurance, why your landlord may require it, and dispel a few popular misconceptions.
What Is Renter’s Insurance and Why Do I Need It?
The purpose and importance of having renter’s insurance is to protect your personal belongings and liability. While the law does not require tenants to purchase renter’s insurance, it is legal for a landlord to require their tenants to have it prior to moving in.
As America moves toward becoming a nation of renters, more would-be homeowners are turning to long-term rental properties as an option. Along with this fundamental shift in American culture, it also means a switch in the types of insurance people need to think about getting.
Why Your Landlord May Require Renter’s Insurance
Why is renter’s insurance necessary? Landlords may require tenants to have renter’s insurance to protect themselves from being sued for damage to the tenant’s personal property. In short, renter’s insurance helps your landlord in the following ways:
- Lowers liability. If a guest gets injured at your home and you don’t have liability coverage for renter’s insurance, they may seek compensation from your landlord. By requiring renter’s insurance, your landlord ensures that an injured guest will turn to your own insurance company for compensation, preventing your landlord from being required to pay court costs.
- It protects them. By requiring renter’s insurance, a landlord ensures they’re only liable for damage to the building’s structural components. Most tenants don’t know this and expect the landlord to replace their possessions if disaster strikes — but that’s where renter’s insurance comes in.
- It helps them recover. You can get coverage from your landlord’s insurance for building damage if you leave the tub running and cause a fire or a flood in your unit — but only after your landlord pays the deductible. In this case, your landlord can recover the deductible from your insurer if you have renter’s insurance.
What Does Renter’s Insurance Cover?
Theft, water backup damage, certain natural disasters, bodily injuries, and other things can be covered by renter’s insurance. Renter’s insurance also protects your belongings and space in the event of a covered accident, whether you rent an apartment, house, or even a dorm. To get a better understanding, we’ll explore the different types of renter’s insurance coverage below.
Personal Property Coverage
If your belongings are damaged or destroyed by an event covered by your renter’s insurance policy, your insurer will cover the expense up to the limits of your policy.
Liability coverage protects you from the legal liability of an accident whether or not it takes place in the place you’re renting. This protects you from being held liable for medical bills and lost wages if a guest is seriously injured in or on the property you’re renting or you slice a golf ball into the other fairway and hit another golfer.
Additional Living Expenses Coverage
If your residence becomes uninhabitable due to a covered event, your renter’s insurance policy will cover expenses exceeding your normal living expenses.
How Much Renter’s Insurance Do You Need?
It’s important to set limits for both personal property coverage and liability coverage when determining how much renter’s insurance you need. Make sure you have enough personal property coverage to insure the value of your belongings, as well as at least $300,000 in liability coverage.
What if You Don’t Own Much?
Although you may not own much, renter’s insurance is still a good idea. Take into account the value of everything you own, such as furniture, clothing, appliances, kitchen tools, and bedding. The cost can add up quickly, and most people own much more than they think they do.
Pet Owners and Renter’s Insurance
Pets provide numerous benefits to owners, but there’s always the risk of a pet biting or otherwise hurting a guest. This can lead to costly medical bills and even more expensive lawsuits.
Depending on your specific renter’s insurance policy, your medical payments coverage and liability coverage may help you pay these expenses. Pets such as reptiles, amphibians, and ferrets are generally not covered by renter’s insurance policies.
Adding Your Landlord as an Additional Insured
In addition to receiving proof of your renter’s insurance, some landlords want to be listed as additional insureds. This allows your landlord to share in your liability limit if they are sued for your negligence.
Renter’s Insurance Misconceptions 101
Similar to life insurance, renter’s insurance is often misunderstood and pushed off until a later date. Because of this, it often prevents people from having the coverage they need if an emergency occurs. We’ve listed and dispelled some popular misconceptions below to help you better understand the ins and outs of renter’s insurance.
Misconception: Renter’s Insurance Is Too Expensive
Renter’s insurance is one of the least expensive types of insurance. Renter’s insurance premiums in the U.S. average just $168 per year, well below the average homeowners’ insurance policy cost of $1,083.
It will vary in price, but a standard tenant’s insurance policy can easily be found for $14 per month or less, with coverage for $30,000 in personal property, $300,000 in liability, and loss of use and medical payments as well.
Misconception: My Landlord’s Insurance Covers My Personal Property
Renters are not covered by their landlord or management company’s insurance. Landlords’ insurance generally only covers the building where you live. Renters are solely responsible for insuring their personal property, liability, and costs associated with loss of use.
Misconception: My Possessions Aren’t Valuable Enough to Warrant Renter’s Insurance
Most people’s personal items are worth more than their estimates. The average value of possessions for a standard two-room apartment is about $30,000. Everyday accessories like your cell phone, laptop, and clothes can quickly add up to much more than a lot of renters have in their bank accounts.
Misconception: I Don’t Need Liability Coverage
Liability insurance is something that every tenant should strongly consider, regardless of how careful they think they are. Many renters believe they don’t need liability coverage because they rarely have guests over or their chances of someone getting hurt at their place is almost nonexistent. However, it’s always a good idea to prepare for the worst — such as when your dog bites a guest or a visitor slips on your stairwell.
Renter’s Insurance FAQs
Though getting renter’s insurance is simple and inexpensive, there are a lot of questions surrounding specific circumstances pertaining to renters. We’ve compiled answers to a few popular questions below. For additional information, we’d love to schedule a conversation with you to help you understand the type of renter’s insurance that’s right for you.
Do I Need Renter’s Insurance If I Rent A Room?
It’s a good idea to formalize living arrangements, even if it’s something as simple as renting a room from a friend. Ask the person you’re renting the room from to draft a simple lease so you know how much rent you pay, when it ends, and what your responsibilities are when it comes to property security. Documentation like this can be useful in submitting a claim.
Do I Need Renter’s Insurance If My Roommate Has It?
Most renter’s insurance policies do not cover your roommates’ belongings unless they are related to you or listed on your policy. Unrelated roommates should generally buy their own renter’s insurance.
Do I Need Renter’s Insurance In Assisted Living?
Some seniors believe if they don’t drive or own a home, they have nothing of value. But everything — small and large — that helps you function and enhances your life should be considered. Take a look at your clothes, books, shoes, and plants.
While many of your daily needs may be covered by your senior community, most senior living communities do not provide coverage for small items in the event of a natural disaster. By purchasing your own insurance, you ensure even those little things that matter to you are protected.
Do I Need Renter’s Insurance In College?
Student renter’s insurance may not be required if you live on campus in a dorm room or apartment owned by your university and leave campus during breaks. Since you still legally reside in your parents’ home, your parents’ homeowner’s or renter’s insurance policy may protect you. You should confirm with your parents’ insurance company that you’re protected by their insurance, though.
Do I Need Renter’s Insurance for Airbnb?
You may need renter’s insurance for an Airbnb if the house, cabin, or condo you plan to rent out as an Airbnb is a property you are renting yourself.
Before you check your renter’s policy, read your lease to determine whether it covers vacation rentals (or home-sharing). There are some short-term leases that prohibit business activity, even if they do not specifically state that.
You should contact the property owner if you have any questions about using the property as an Airbnb rental after reading your lease. Knowing ahead of time is better than spending time and effort on something that’s illegal.