11 Facts You Should Know About Renters Insurance

Many people rent homes at some point in their lives, from college students in their first off-campus apartments to retired couples who are downsizing. If you’re a new renter, you might not be clear on what renters insurance is, and whether you need it.

We’ll explain what these policies cover and how they can protect you in unexpected ways.

Renters Insurance: The Basics

Renters insurance has three main components:

• Personal property coverage: Renters insurance covers the contents of your residence, including clothes, furniture, dishes, bicycles, TVs, computers and other electronics.
• Liability coverage: The liability component might be the biggest reason to get renters insurance because it can protect you from huge financial losses. Renters insurance can cover you if you’re sued by someone injured in your home or your dog bites someone outside your home.
• Additional living expenses coverage: If you cannot stay in your apartment after a fire, a burst pipe or another disaster, this coverage will pay for temporary lodging.

A renters insurance policy will not extend coverage to any of your roommates unless their names are specifically written in the policy.

Here are 11 other key facts you should know about renters insurance:

1. 

   On average, renters insurance costs less than $20 per month. According to different websites, the average tenant insurance premium in Canada is between $15 and $30 a month. Of course, your premium will depend on several factors, including where you live and the type of coverage you choose.

2. Standard renters policies only cover named perils, or events that may damage your possessions. These include fires, lightning, windstorms, hail, smoke, vandalism, theft, freezing, and damage from aircraft, vehicles, and riots.
3. Deductibles for renters policies tend to start at around $500 and can go up to $1,000 or $2,000, according to the finance site The Simple Dollar. Higher deductibles tend to mean lower premiums but also higher floors before coverage kicks in.
4. Your belongings are covered away from home for the perils listed on your policy. If a thief swipes your luggage from a hotel room, you are covered. This off-premises coverage is usually limited to a portion of your total coverage for personal belongings, such as 10%.
5. You may have some coverage for personal property stored in your car. For example, if someone steals books out of your car, your renters insurance may cover them.
6. Your landlord may require you to buy renters insurance. Your landlord’s insurance covers their building and grounds, but not your belongings. A growing number of landlords require tenants to purchase renters insurance policies to reduce potential liability at their end.
7. You can choose to be reimbursed based on actual cash value or replacement cost value. Something to take into consideration is actual cash value (ACV) or replacement cost value (RCV) coverage for your belongings. ACV is what the item is worth, factoring in depreciation. ACV is generally less than what it would cost to replace the item. Conversely, RCV is what it would cost to replace the item with a new one of similar kind and quality. For this reason, RCV is more expensive than ACV.
8. Roommates must be named on the policy. A renters insurance policy will not extend coverage to any of your roommates unless their names are specifically written in the policy. Though it is not recommended, sharing a renters insurance policy with your roommate is possible. However, most insurance brokers suggest getting your own customized policy to fit your particular needs.
9. Floods aren’t automatically covered. Damage to your possessions from flooding is excluded under standard tenant insurance policies. However, flood coverage is available as an endorsement from some private insurers.
10. Earthquakes aren’t automatically covered. As with flooding, standard renters policies do not cover earthquake damage. Coverage is available as an endorsement or a separate policy. Earthquake insurance provides protection from the shaking and cracking that can destroy personal possessions. You can buy it from a private insurer.
11. You can buy a “floater” to cover more costly valuables if they are lost or stolen. If you have expensive jewelry, collectibles, sports equipment or musical instruments, consider adding a floater to your policy to protect against their loss.

Renters insurance can cover you if you’re sued by someone injured in your home or your dog bites someone outside your home.

Know the facts about your insurance

Don’t make the common but costly mistake of thinking your landlord’s insurance protects you and your belongings. It doesn’t. The time to secure your renters insurance is now, before a disaster occurs. Talk to your insurance broker to find the right type and amount of renters insurance for you.