Why do people need renters’ insurance?

FIn the end, getting your hands on the keys to your new home after signing the lease can give you a sense of relief. That means you’ve passed all the appropriate steps, such as submitting your application, budgeting for the fees involved, and possibly getting a co-signer. That’s no small feat in the current economy, where rents are higher than ever and housing shortages make applications highly competitive in some areas. But if you think the logistics of moving into your new home ends with carrying boxes of your belongings over the front door, think again. According to financial experts, a top mistake renters should avoid is not buying renters insurance.

“Not buying renter insurance is a very common mistake, especially since it can be so cheap,” says Dennis Shirshikov, MS, a professor of finance and economics at the City University of New York. . Good + Good. Renters insurance is a policy that covers the repair or replacement of personal property in the event of an unforeseen event, be it fire, flood or burglary. Those who do not have it will not be compensated for any damage to their personal belongings should events of this type occur.

Although some landlords or property managers require tenants to purchase renters insurance to prevent possible future legal disputes, this is not legally required. management and many tenants do not buy. “According to statistics provided by Simply Insurance, about 57% of households rent in the US,” said Johannes Larsson, a personal finance expert, chief executive officer and founder of the website have renters insurance, a total of about 25 million households are insured.” helps people compare financial services like personal loans, car loans, mortgages, credit cards, etc.

According to Shirshikkov, lack of awareness is the main reason why people don’t buy renters insurance. “It’s cheaper than Netflix per month and offers a lot of protection. A lot of people also don’t know that renter insurance is available,” he said.

“Tenant’s insurance is important to keep you and your property safe while in a rental property,” Larsson adds. “It really saves people money in the long run because the landlord may not be able to reimburse you for damage to your property and personal effects,” especially in cases of fire, theft, natural disasters and other accidents.

We have tapped financial experts to provide us with all the insider details about renters insurance. Here’s everything you need to know about it.

How does renter insurance work?

People usually buy renters insurance before they move in, however, landlords can ask for this in their lease, according to Sean Burgess, chief claims officer at Scottsdale-based Lemonade, Arizona. “Renters insurance policies cover a specific property at a specific address, so when you’ve moved out, don’t forget to cancel your old policy,” he said.

You can get coverage for three main types of protection: personal property, liability protection, and additional cost of living (ALE). Personal property protects your belongings in your apartment while liability protects you against lawsuits for bodily harm or injury caused by you and your family (yes, pets too). counted). On the other hand, if your home is destroyed by a natural disaster and fire, ALE will cover the hotel, rent, meals and any other costs incurred during the temporary relocation.

When shopping for renter insurance, Burgess says to use Google and compare providers’ prices for different plans. Also, “look at ratings and reviews from customers and industry experts,” he says.

The insurance provider you go with will also depend on coverage limits. To determine how much you want to be insured, Burgess recommends estimating the value of all your things (think: furniture, jewelry, an expensive bicycle, etc.). For items of great value, it can be helpful if you keep digital receipts of electronics, expensive jewelry, artwork, etc.

“In exchange for the protection that renters insurance provides, you make a monthly or annual payment—called a ‘premium’)—to your insurance company, says Burgess. He added that premiums depend on many factors, including geographic location, the level of coverage you want to buy, your claim history, etc. “If you file a claim, the person insurers Your tenant may indemnify you for any covered loss against your deductible, the amount deducted from any claim payments from your insurance company.”

What does renters insurance cover?

According to William Bevins, CFP, CTFA, a financial planner based in Nashville, Tennessee, in the event of a fire, theft, water damage, smoke, or natural disaster, renter insurance will protect your furniture. This means that the furniture, clothing (yes, the amount of your luggage, bags and shoes), electronics and other personal items in the rented space will be covered and reimbursed by insurance. . However, there are limits to how much you can claim and the amount will depend on the insurance carrier. Personal property insurance ranges from $15,000 to $500,000, per progressive. At Lemonade, basic personal property insurance policies start at $10,000, says Burgess.

In addition to personal property, Burgess says that most policies include personal liability insurance, which can be useful if something bad happens (for example, someone injures your property. Friend). At Lemonade, Burgess says personal liability insurance starts at $100,000. “This means your renter or homeowners insurance company will pay up to $100,000 in legal fees, medical expenses or damages per liability claim,” explains Burgess. The coverage limit of this policy can be increased at any time and up to one million dollars. Some states, however, will set lower coverage limits—in California, Lemonade’s liability coverage is capped at $500,000, according to Burgess.

While most standard insurance policies include personal liability coverage, it’s important to check with your insurance company to see if it’s included in your plan. . “This [personal liability coverage] can be helpful in a number of situations, including if/when you need an attorney to defend yourself, medical payments for someone else, payment for property damage, damage caused by your pet and damage caused by your family members to others,” Burgess explains. He says personal liability insurance will only cover personal injury to others, not to you or others are covered under your policy.

When you move in, Bevins recommends building a visual inventory of your personal possessions before you lose them through a combination of photos, videos, and receipts of high-value items, or valuable items. “This document will come in handy in the event of theft or total loss by fire,” he adds, and will come in handy during the claim process.

How much does renter insurance cost?

The cost of renters insurance will vary by insurance provider, geographic location, and how much you want to be covered, Burgess says. According to NerdWallet, a personal finance company, renters insurance ranges from $8 to $22 per month. States like Michigan and Mississippi have higher rates ($22 per month) than Wisconsin ($9 per month) and Wyoming ($8 per month).

Once your claim is submitted and processed, deductions—your contribution or financial participation in the claim in the event something happens to your belongings—are deducted from the payment. maths. For example, “a tenant opted for a renter’s insurance policy with a $250 deductible. A few months later, they filed a claim for a $1,000 stolen bike— if the claim is approved, the insurance company will pay them $750 ($1,000 minus $250) deductible),” Burgess explained.

How to file a claim?

If you return home to find a damaged device or discover that items have been stolen from your home, Bevins recommends taking photos and video of the damage. Then, contact your insurer immediately, file a police report (if theft)—possibly included as evidence in your claim—and start building build your home directory. Building this list can paint a better picture for the insurance adjuster, the company representative, who will investigate your claim and determine the amount owed.

Having your home broken into or having your personal belongings discovered is stressful enough. That’s why financial experts recommend getting renter’s insurance—it can give you peace of mind when you leave your home and help you weather turbulent times better. .


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