What is Rental Insurance And How It Works?
I understand the divine feeling of buying your own house is a great but till then you need a roof on your head.
But have you ever heard that people owing private property have home insurance to safeguard their possession and personal belongings from visitors?
Yes, that’s true. And as a tenant, it is crucial for you to invest few bucks in a rental insurance policy that will provide protection and coverage to your personal belongings in case of vandalism, fire, theft, water brokerage and many more. Rental Insurance, also offers coverage to liability protection and additional living expenses.
For beginners, Liability protection is crucial part of rental insurance as it safeguard you against potential lawsuits (legal expenses, settlements and judgements) and claims if any property in the building premises is damaged or if you accidentally cause bodily injury.
Many first time tenant have heard commonly discussed myths that stop them from moving forward. However, each penny invested in rental insurance can save you from major losses that we cannot predict.
What is Rental Insurance?
Rental Insurance, also known as renter insurance or tenant insurance is a policy provide you protection and coverage for people living in a rental property. It offers multiple coverage and benefits such as personal belongings, liability coverage and additional living coverage/expenses based on the premium you choose.
How Rental Insurance Works?
Rental Insurance, provide financial protection to tenants during various situations. This creates a sense of relief in tenants life if they have an emergency evacuation or damage to the property. However, it is important to note that rental insurance does not cover the structure of the building as this is responsibility of landlord’s insurance.
1. Choosing Policy
As a tenant, it is important for you to research and analyze the rental insurance’s policy to understand which will align with your specific needs. You can compare different policies on multiple factors such as premiums, coverage limit, deductibles and any other additional features.
2. Coverage and Premium
After choosing the rental insurance plan which align with your needs, you will have to pay a premium that is usually the cost of insurance coverage. The price of premium may vary depending on various factors such as the value of your personal belongings, location of your unit, how much liability coverage is required and any other additional options if you choose.
3. Personal Property Coverage
Personal Property Coverage offers protectional to you personal belongings against various dangers such as break-ins, vandalism, water brokerage or specific natural disaster. In case you personal property gets damaged by any of the reason mentioned in your insurance policy, insurance company will reimburse you that value up to the policy’s limit.
Additionally, your tenant insurance covers any unintentional damage caused by you not by your friends or roommate. In case you are living in a shared house or apartment, it is crucial to buy insurance for each individual.
4. Liability Coverage
Liability coverage help safeguard financially if you are found accountable for causing bodily injury or property damage to someone’s unit, lounge, gym or any other ameneties offered by the property owner. In such situation, liability coverage works as a saviour which helps in covering legal expense, settlements or any judgement.
5. Additional Living Coverage (ALC)
Additional Living Coverage offers protection during an uninhabitable event cause in your property. For example, If there is fire in your unit, then ALC will cover hotel bills, meals cost (if the hotel doesn’t have a kitchen) and other living expenses that you may need while you are out of damaged house.
Policy Limitations
Reading the terms and conditions of your rental insurance policy is crucial to understand the exclusions and limitations. Major standard rental policies do not cover few specific events such as earthquakes, flood that may need an additional insurance coverage. Additionally, high-value items such as jewelry, artwork, coins and stamp collections can be protected but you have to take separate insurance.
Flexibility and Portability
Rental Insurance are typically portable and flexible that can be easily customized to suit your specific needs. It allows you to choose the coverage limit, deductibles and liability limit starts from $100,000 that covers any claims and lawsuits.
Additionally, If you plan to move in a new unit, you can easily transfer your insurance policy by updating your address, ensuring continuous protection and coverage of your personal belongings and liability coverage.
What is the best Liability Limit?
The amount of Liability Limit coverage must be high enough to cover the cost of your assets in case of any incidents. Typically, most experts advice individuals to take liability limit of at least $100,000 to $300,000.
Do you need Rental Insurance Before signing the lease?
No, you do not need rental insurance before signing the lease, However, property owners required the Insurance document on the same day when they call you sign the lease and submit the half deposit of the rent.
Can I Buy Rental Insurance If I am not on the Lease?
No, you don’t need to be a part of the lease to buy Rental Insurance. If you want to feel secured from any unforeseen events buy yourself a separate insurance because it’s a good investment.
Final Words
Rental Insurance can be great investment if there is some problem caused in your unit or if you unintentionally damaged someone’s property or a person. Additionally, there is no law that makes it mandatory to take a rental insurance but as a tenant, it is always better to play safe.
With an investment of $25 – $50 depending on the premium you have selected, the insurance will maintain the peace in your life during any unforeseen events. Additionally, I highly recommend you to shop around, compare different policies and select the one that suits your specific needs.
Finally, contact the insurance provider in the event of damage or loss to file a claim. The company will also require documentations and necessary information before processing your insurance claim request.
