Part 1: What is Renters Insurance, What is Covered and Exclusions
Part 2: Do you Need Renters Insurance, Where to Buy, Things to Keep in Mind, Cost, Filing a Claim
Introduction to Renters Insurance for Kids and Teens
This video explains the concept of renters insurance in a simple, concise way for kids and beginners. It could be used by kids & teens to learn about renters insurance, or used as a money & personal finance resource by parents and teachers as part of a Financial Literacy course or K-12 curriculum.
Suitable for students from grade levels:
- Kindergarten
- Elementary School
- Middle School
- High School
The topics covered are:
- What is renters insurance
- What is not covered by renters insurance
- Do you need renters insurance
- Where to buy renters insurance and what to keep in mind
- How much does renters insurance cost
- How to file a renters insurance claim
What is renters insurance?
Renters insurance provides financial protection to tenants of a rented home like a house or an apartment. It covers three main areas: personal property, liability, and additional living expenses.
Personal property covers your belongings, such as furniture, electronics, small appliances, shoes, and clothing, against risks like fire, theft, lightning, windstorm, certain types of water damage, etc., up to a predetermined limit.
For example, if your TV is stolen or your furniture is damaged in a fire, renters insurance can help cover the cost.
Renters insurance may also cover personal property when youโre away from home – for instance, your gaming console gets stolen from your car or your laptop gets stolen while you are on vacation.
Liability protection covers legal expenses and medical bills for a guestโs injuries while in your home, as well as damages to othersโ property.
For example, if thereโs a fire in your apartment that damages your neighborโs apartment, or if someone slips and falls in your apartment and sues you, renters insurance can help cover legal fees and any settlement you have to pay, up to the policy limit.
Some renters insurance may also pay if your dog bites someone – so if you have a pet, make sure to check that it is covered.
If your rental unit becomes uninhabitable due to something covered in the policy – like a fire – the additional living expenses part of renters insurance helps pay for hotel bills, restaurant meals, and certain other costs while your home is being repaired.
While it isnโt a legal requirement, some landlords require tenants to have renters insurance before handing over the keys.
What is not covered by renters insurance?
High-value items like jewelry, collectibles, and expensive electronics may have limited coverage – unless you purchase an add-on specifically for it.
In addition, damages caused by floods or earthquakes are typically not covered under standard renters insurance policies, but you can buy separate policies for these risks.
Mold, pest infestations or damage due to the tenant’s own negligence are not covered.
Lastly, damage to the building itself is not covered by rentersโ insurance, but the landlordโs insurance policy would cover this.
Do I need renters insurance?
While renters insurance isnโt legally necessary and many landlords may not require it, it provides enormous peace of mind for a very nominal cost, making it a no brainer.
You cannot control the weather, theft, or injuries, and the resulting expenses could wipe out your savings very quickly.
So if you are renting a home, itโs important to have renters insurance as it will give you both financial protection and peace of mind.
Where can I buy renters insurance? And what should I keep in mind?
You can buy a renters insurance policy from insurance companies, online marketplaces or comparison platforms, and some banks and credit unions.
When comparing policies, make sure to look at the amount of coverage offered, the deductible, monthly premiums, as well as what is and isnโt covered.
Make sure to ask for any discounts you may be eligible for, like having a security system, smoke detectors, auto-payments etc. This way, you can get the best price and a policy that fits your needs.
If you already have auto insurance or life insurance from a certain provider, you may get a bundling discount if you also get renters insurance from them.
You may want to go for additional coverage at an extra cost if you have a lot of high value items that exceed the policyโs limit, or if you live in an area prone to floods or earthquakes or have a home business with inventory or equipment.
Make sure you understand whether the policy offers coverage on an actual cash value basis or replacement cost basis. While the premium is lower for actual cash value, it only provides the current (depreciated) value of the items at the time of the loss.
For instance, if a fire damages your 10 year old couch, you will only get what a 10 yr old couch would be worth today, not what a new replacement couch would cost.
While premiums are higher for replacement cost policy, you can rest assured that it will cover the cost of a brand new replacement for a similar item.
How much does renters insurance cost?
The cost varies based on various factors such as the location of the rental property, the amount of coverage, deductible, and your credit score.
On average, renters insurance costs between $15 and $20 per month in the US.
The higher the coverage, the higher the premium. On the other hand, the higher the deductible, the lower the premium. Also, a safer neighborhood means lower costs.
How do I file a renters insurance claim?
If you would like to file a claim, you should first take photos and videos of the damage, or create an inventory of what was lost or stolen. The more details – like police reports, receipts of the items, etc. – the better.
Then, you can file a claim with the insurance company – usually online or by phone. Youโll need to provide information related to the damages, and fill out some forms.
Donโt hesitate to ask any questions about the process and discuss any emergency repairs that may be needed.
If the claim is approved, you will be reimbursed by the insurance company up to the policy limit minus the deductible.
For example, if your claim is approved for $7,000 and your deductible is $500, you will be paid $6,500.