how renters insurance works
insurance policies cover different types of losses life insurance provides a death benefit for a certain amount to an insured party s beneficiaries health insurance mitigates the costs associated with routine and unexpected medical expenses there are also insurance policies that cover properties for instance homeowners insurance protects policyholders against damage to their homes and belongings as well as any claims filed against them by others for injuries sustained while on the premises renters insurance is a common form of property insurance that tenants take out when they rent a home townhouse apartment condo room or another type of dwelling it s also available to anyone who sublets a property from another tenant policies vary based on the type of coverage a renter chooses the higher the coverage the higher the premium these kinds of policies protect the insured party against losses to their personal property within the dwelling as a result of loss from theft fire and other types of disastrous loss events the amount of coverage depends on premiums paid and other factors you should buy enough renters insurance to replace all of your possessions in the event of a loss event the easiest way to determine this amount is to create a detailed list of all of your belongings with estimated values additional living expensespolicies also provide financial protection against liability claims and additional living expenses ales policyholders are covered against lawsuits for bodily injury or property damage done by the renter their family members and pets it also covers legal defense costs up to the limit of a policy additional living expenses coverage provides financial protection against an insured disaster that makes it necessary to temporarily live somewhere else the coverage pays for hotel bills temporary rentals meals and other costs while a rental home is being repaired or rebuilt most policies reimburse the insured for the full difference between the additional expenses and their normal living expenses there is however either a dollar limit on the total amount an insurer will pay or a time limit on the ale payments renters insurance and valuationrenters can choose between replacement cost value rcv or actual cash value acv coverage the type of coverage for each policy may be substantially different based on how the policy calculates the value of what was lost if you have an acv policy the insurance company will reimburse you for the value of your belongings at the time of the loss taking into account depreciation and wear and tear for example if your five year old laptop gets stolen the insurance company will consider its current market value which will probably be significantly lower than the original purchase price as a result the payout under an acv policy might not be enough to replace your belongings with new items if you have an rcv policy the insurance company will reimburse you for the cost of replacing your belongings with new items of similar kind and quality without considering depreciation in the same example of the stolen laptop an rcv policy would provide the funds needed to purchase a new laptop with similar specifications to the one that was stolen even if the cost exceeds the value of the depreciated laptop proof of renters insurance is required by many landlords without this coverage the tenant is responsible for the loss out of pocket renters insurance vs landlord s insurancerenters insurance is designed to protect tenants or renters it covers the personal belongings and liability of the tenant if a covered event such as theft fire or water damage damages or destroys the tenant s personal property renters insurance can provide compensation for the loss landlord s insurance also known as landlord insurance or dwelling insurance is designed to protect the property owner or landlord this insurance policy covers the physical structure of the rental property such as the building roof walls and fixtures it also provides liability coverage for the landlord if a tenant or visitor is injured on the property and holds the landlord responsible the important takeaway here is that landlord s insurance does not cover the personal belongings of the tenants personal belongings of the tenant are the responsibility of the individual tenants through their own renters insurance make sure your renters insurance policy includes no fault medical coverage as part of the liability protection which allows individuals who are injured on your property to submit their medical bills directly to the insurance company in lieu of a lawsuit renters insurance vs other policiesalthough most renters insurance policies cover losses from fire or smoke lightning vandalism theft explosion windstorms and certain types of water damage the majority don t cover floods or earthquakes flood insurance is available from the national flood insurance program and a few private insurers earthquake insurance may be purchased separately or added as an endorsement to an existing renters policy for example in california obviously a high risk state for earthquakes the legislature created the nonprofit california earthquake authority to help people get affordable coverage can i get renters insurance if i live with roommates yes you can get renters insurance when living with roommates however it s essential to discuss the coverage with your insurance provider as individual policies might be needed to ensure each person s belongings are adequately protected 