As homeowners, most people carry a mortgage and, therefore, have no choice but to purchase homeowners insurance as a requirement of their loan. But, for renters, the choice is their own — and many people facing financial uncertainty might choose to go without renter’s insurance, even though they have many of the same risks as homeowners when it comes to protecting possessions or being liable for accidents at home. Some of the most common misperceptions include:
“Renter’s insurance is too expensive, and I already have too many bills to pay.” The average renter’s insurance policy costs between $15 and $30 per month. Replacing all of your possessions or being liable for an accident on your premises will cost much more.
“I don’t have that many valuables; renter’s insurance isn’t worth the cost.” Renter’s insurance policies can cover everything from electronics to clothing to household appliances. Even a minimal number of items could add up to thousands of dollars’ worth of merchandise, which can all be covered in a basic policy.
“My landlord has insurance, so I’m already protected.” Your landlord has insurance for structural damage to the building, and might even be protected against damage caused by tenants. However, this coverage does not extend to your personal property, nor does it protect you from being liable for damage you might cause to the building inadvertently (e.g., a kitchen fire or a plumbing mishap).
Consumers used to having homeowners insurance may not understand the differences between the two types of coverage. The National Association of Insurance Commissioners (NAIC) offers these tips for former homeowners who are now renting:
- How much renter’s insurance do you need? Talk to your insurance agent or company about the property you want to protect and the property hazards you would like to be insured from. Your agent can give you coverage policy specifics based on your state and the type of policy you want. They will answer any important questions you have about:
What hazards are included in your plan and if you need a separate policy for specific circumstances
If your insurance plan affects your roommate(s), if any
How you should determine value for your items
What some of the insurance terms mean or what they include
What optional coverage might be available to you
How much liability coverage is included in your plan
- Can you get a discount on renter’s insurance if your residence has particular safety features, like a burglar alarm? Many insurers will reduce your premiums if you have fire or burglar alarms, fire extinguishers, sprinkler systems and/or deadbolts on exterior doors. Some companies might also offer discounts if you have more than one policy with them. Be sure to ask about any discount you might be entitled to.
- Are you covered in the case of a flood or earthquake? These natural disasters are not generally covered by a renter’s or homeowners insurance policy. Speak to your insurance agent about coverages available in your area. See more info on the Vermont Insurance Division website concerning Flood Insurance and Earthquake Insurance.
- Could owning a pet cause your premium to be higher? Certain municipalities require that owners of select breeds of pets have insurance policies to cover damages and/or injuries caused by the animal. This liability might be covered under a standard renter’s insurance policy, but some insurance companies might require the purchase of additional coverage. Talk with your insurance agent or company about the options and how they might affect your premium costs.
- Does renter’s insurance only cover you when you’re at home? Many policies do not limit protection to home-based situations. For example, items you have insured often are covered if they are stolen by someone who breaks into your car or if they are damaged while not on your property.
- Is personal liability included? A renter’s insurance policy covers your property and your personal legal responsibility (or liability) for injuries to others and/or their property while they are on your property.
- Will you receive additional living expenses if you have to live somewhere else while your apartment is being repaired? If there is damage to the building you are renting and you must live elsewhere while the building is being repaired, you will have coverage for additional living expenses incurred during the reconstruction period.
- How do you expedite your renter’s insurance claim? A home inventory – along with photos and proof of ownership – make it easier to file an accurate, detailed insurance claim in case your home is damaged or destroyed in a disaster. A home inventory can also help determine how much coverage you need from your renter's insurance. Go to www.naic.org/index_disaster_section.htmto download a free home inventory checklist.
Get More Information
If you have questions or are confused about your insurance policy, you can call the Vermont Insurance Department at 800-964-1784. You can also visit the website of the National Association of Insurance Commissioners at www.NAIC.org and www.InsureUonline.org.