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A renters insurance policy explains your coverages, limits and any stipulations of your renters insurance, which protects you and your personal belongings.
Renters policies are very similar to homeowners insurance except they do not cover a physical dwelling. The structure of your rental unit should be covered by your landlord’s insurance policy. When looking for a renters policy, you’ll want to make sure that your insurance coverage will fully protect you and your personal possessions.
Find below the types of coverage that you can expect from a renters policy.
The main types of renters policies available are actual cash value (ACV) and replacement cost value (RCV) policies. The difference between these renters insurance categories comes down to how your insurer pays out to cover an insurance claim. Policyholders can typically choose which type they would like at the outset of their policy term. However, some renters insurance companies may only offer one or the other, so make sure to inquire about this before purchasing your policy.
Read our rundown of renters insurance policy types to see which is best for you.
Actual cash value coverage replaces your personal property at the value that they are currently worth. This coverage type factors in the depreciation of your property to reflect wear and tear. Consider it similar to the cost of a “new” item versus a “used” item. These policies tend to be somewhat cheaper as they do not require the insurer to pay out the full price for lost or damaged property.
Replacement cost coverage replaces your personal belongings at their full value. Depreciation is not considered, meaning that you will be able to replace your items of equal kind and quality without having to face additional out-of-pocket expenses. This type of coverage is well suited for renters wanting to fully protect their personal belongings, though it is likely to carry a higher price tag than ACV coverage.
Your policy will cover damage caused by certain named perils. Below are the most commonly covered perils for the average renters policy.
Certain perils may not be covered by an insurer. While you can sometimes add an endorsement to cover these, some policies may be more limited in what they cover.
Below are some of the common exclusions found in many renters insurance policies.
As stated above, the average renters policy comes with a number of exclusions. If you are concerned about not being fully covered, consider these additional coverage options (endorsements) when purchasing your policy. It’s important to note that such endorsements may not be available from every insurer.
Nearly all insurance companies place limits on coverage for more expensive items (such as jewelry, electronics, art, etc.). If the value of such items exceeds these limits, it’s wise to add a scheduled property endorsement in the amount of each item’s worth.
If water backs up from your drain or sewer, this coverage add-on can offer protection.
This coverage can help protect you if you (or a pet) cause accidental damage to your landlord’s property.
You can be held liable if your dog bites another person (or their pet). This coverage steps in to cover your liability and damages. However, many insurers have strict breed restrictions, meaning that you will want to check that your dog doesn’t fall into that category or have an attack history.
Depending on where you live, some insurers may offer an earthquake endorsement should an earth movement event damage your belongings or render your rental unit uninhabitable.
Your deductible is your share of the cost of covering an insurance claim. For instance, if you file a claim for $2,000 and have a $500 deductible, your insurer would pay out $1,500 for the claim. Renters insurance deductibles tend to be quite a bit cheaper than homeowners deductibles, where they can run in the thousands. Typical renters insurance deductibles average anywhere from $100 to $1,000 depending on the insurer and the amount of coverage that you carry.
The amount of renters insurance you need is dependent on your individual situation. Consider the total amount of personal belongings you have when determining your coverage limit. It can be a good idea to put together a home inventory to help with this. Also, when searching for a policy, you may want to consider bundling renters and auto insurance for extra savings.
Overall, renters insurance coverage is very important if you want to stay protected. While renters coverage can be pretty cheap, it’s still a good idea to shop around to find the company and policy that best fits your needs. Click the link below to get a renters insurance quote.
The Zebra is not an insurance company. We publish data-backed, expert-reviewed resources to help consumers make more informed insurance decisions.
The Zebra’s insurance content is written and reviewed for accuracy by licensed insurance agents.
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