Everything You Need to Know About Tenant Insurance

 

During the excitement of moving into your new apartment, insurance is often overlooked and forgotten. It is a crucial asset that ensures any unexpected events don’t lead to financial turmoil. At the end of the day, you want to know that you and your belongings are protected.

In this comprehensive guide, we will discuss everything you need to know about tenant insurance and help you make an informed decision.

 

What Is Tenant Insurance?

Tenant or renter’s insurance is financial coverage that protects your personal belongings against a wide range of unexpected occurrences. It also covers personal liabilities and property damage to your rental home. If you move, your policy comes with you. However, there may be changes made to the contract depending on the features of the new property. While tenant insurance is not mandatory or required, it is highly encouraged.

 

What Does Tenant Insurance Cover?

Many different aspects of renter’s insurance span a variety of potential scenarios. 

  • Personal Property covers your belongings like clothing, furniture, electronics, valuables and more. It protects them during threats like fire, vandalism and theft.
  • Liability Coverage covers legal expenses in any situation where you are found guilty of damaging the property. It will also cover medical expenses for any guests that are injured while on the premises.
  • Additional Living Expenses (ALE) cover any temporary accommodations and living expenses that result from your home being uninhabitable.

There are also different types of coverage. ‘All risks’ coverage protects the content outlined in the policy from all included perils with the exceptions of those items specifically left out. In contrast, ‘named perils’ only protect your belongings from the specific threats mentioned in the contract.

When setting up the policy, the property and your belongings will either be insured for replacement cost value (RCV) or actual cash value (ACV). If something is damaged, RCV will cover the cost to replace it if it’s stolen. It does not take into consideration the depreciation value. On the other hand, ACV covers the amount to replace the damaged or stolen item, deducting the depreciation value at the time of the loss.

 

What Does Tenant Insurance Exclude?

While renter’s insurance policies cover a broad range of things, it does have some exclusions. Some perils – such as landslides, earthquakes, mould and insect infestation – are not covered under standard policies. In addition, water damage caused by external factors – such as floods, overland water and sewer backups – are not covered. However, these may be able to be added with a separate policy.

Tenant insurance also has a cost limit. There are coverage limits for high-value items like artwork, collectibles and jewellery. Additional coverage may be required but comes at an additional fee.

While renter’s insurance does not cover damage to your car, it can assist with any contents stolen from it. Standard policies also do not cover damage from high-risk dogs or your roommates. Insurance only applies to the policyholder and their immediate family. If your roommate(s) want their belongings to be covered, they will have to sign their own policy.

 

How Much Coverage Can You Get for Your Tenant Insurance?

The typical coverage in most policies is $1 million with some having the option to increase to 2 million dollars. For content insurance, the average is $25,000.

 

How Much Does Tenant Insurance Cost?

Tenant insurance is relatively inexpensive with most policies costing anywhere between $20 to $50 a month, making it $240 to $600 a year.

 

What Factors Influence the Coverage and Cost of Your Tenant Insurance?

Many things can influence the coverage of your renter’s insurance. The first factor is location. Where your rental location is and its proximity to services like fire stations can influence the cost and coverage. The presence of good security – such as alarms, smoke detectors and deadbolt locks – can lower the cost of the policy. Next is your credit score. Depending on your number, insurers may see you as a risk and will be less likely to offer you a policy. Your claims history can also impact your policy. If you have made more claims, your premiums will increase. Deductibles also affect your premiums. The more you pay before insurance, the lower your premium will be. These limitations can greatly impact your policy and the likelihood of getting one in the first place.

 

Which Tenant Insurance Policy Should You Choose?

Your insurance policy will all depend on your belongings, your lifestyle and how protected you want to feel. Start by conducting an inventory of your apartment and the things within it. Once you have this list, you can estimate the value of your possessions. Consider assets and liabilities to determine which policy would work best for you. Once you’ve picked your coverage, seek out different insurance providers to get some quotes. Compare the deductibles, coverage, limits and premiums. This way, you can pick the highest coverage at a reasonable price, all of which will be best for you.

 

How To Purchase Tenant Insurance

The best place to find renter’s insurance is through an insurance provider. These include brokers, agents and insurance companies. After you set up a meeting to apply for insurance, complete the proper documentation. You will need the address of residence, your legal name and personal information (like date of birth), the total monetary value of your belongings, the features of the property (such as security) and who else will be staying in your apartment. Once you have done a quote comparison and found the best plan for you, sign the contract and your assets are covered.