Understanding renters insurance
When you live in a house or apartment that is owned by someone else, their insurance almost never covers your stuff. If there is a fire or a weather event that damages or destroys the space in which you live, your landlord’s insurance will pay for the damage to the structure, but it likely won’t pay to replace your furniture or your personal possessions, nor will it pay for you to live somewhere else while your space is being fixed. You need renters insurance for that.
What is it?
A renters policy insures your personal possessions when you live in an apartment or house that you don’t own. Most renters policies also will pay living expenses if you are forced to live somewhere else, and many also offer personal liability coverage.
Who is it for?
Renters coverage is for people who live in a space that they do not own. If you own a space that you rent to someone else, the coverage you need is not a renters policy.
How does it work?
Renters insurance works just like most other property/casualty insurance policies. If you experience an event that the policy covers, such as a fire or damage from a storm, you must contact your insurer to make a claim. Once the claim is certified, you will be reimbursed for losses up to the limits in the policy minus any deductible you have. If you need to live elsewhere while repairs are completed, your insurer will either set that up for you and pay for it or ask you to make your own arrangements, which it will reimburse.
Types of coverage
Renters coverage is pretty standard, although there may be some variation based on the type of dwelling in which you live. The main difference in policies is whether they pay actual cash value for your things or replacement value. Replacement value policies typically cost more because you usually get more reimbursement for damages.
The major benefit of a renters policy is ensuring that your possessions are covered in the event of a catastrophe. An additional benefit is that dollar for dollar renters coverage is about the cheapest property insurance there is.