What Does Renter’s Insurance REALLY Cover

Performance Property Real Estate Question

Q: I just got my first apartment. What does rental insurance actually cover? Marvin, Little Ferry, NJ

A: Renter’s insurance can be bought by anyone renting an apartment, condo, home or other living space. Renter’s insurance is normally cheaper than homeowner insurance.

The central feature of renter’s insurance is coverage of personal belongings from unexpected damage and theft.

What does renter’s insurance cover?

Renter’s insurance generally provides four types of financial protection:

  • Personal property damage: If a tenant’s personal property is damaged, renter’s insurance will cover the cost of the damage up to your policy’s limits.
  • Personal liability: If someone is injured or property is damaged, and a tenant is blamed for the event, their policy will cover liability costs, including legal costs.
  • Additional living expenses: If a tenant’s rental home becomes uninhabitable as a result of a covered peril, renter’s insurance will pay for expenses above and beyond their normal living expenses. This is sometimes called loss of use coverage. If you live in an expensive city, it makes sense to increase the limit on the additional living expenses part of your policy.
  • Medical Payments: Coverage for medical costs if a guest is injured in the property.

As with any insurance, it’s important to understand exactly which situations are covered and which are not. It’s also important to take note of the deductible payment the insured tenant must pay as part of their policy if there is a claim.

A tenant can only make a renter’s insurance claim if the peril that caused the damage is included in their policy.

One caveat is that insurance companies commonly write into their rental policies that they will only cover the expenses of an attorney of their choice!

In addition to the four primary coverages, renter’s insurance can provide supplementary coverages like, debris removal, credit card and check forgery and food spoilage in the event of a power failure.

Before anything happens, it’s a good idea to create an inventory of all your possessions along with documents that determine their estimated monetary value, like paid receipts. Document the damage: After a qualifying event, such as a fire in your residence, document all damaged items to prepare to make a claim.

In my next episode, I will cover the things that renter’s insurance does not cover. Thanks for your question, Marvin.

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