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Do I need tenant’s insurance when I rent a house or condo?

Finding a good place to live is certainly a moment to celebrate. It’s also the perfect time to ask: do I need renter’s insurance? Whether you’re renting an entire house or a small apartment renter’s or tenant’s insurance is the best option to protect your belongings. It may also be required by your landlord in your lease agreement.

Doesn’t my landlord’s insurance cover me?

For many renters the assumption is that because the landlord must have insurance there’s no point in getting tenant’s insurance. Here’s the problem: If there was a fire that destroyed the home you rented and everything in it the landlord’s insurance policy would only pay to rebuild the home; it wouldn’t reimburse you for everything you lost in the fire. That’s because the landlord’s policy only protects their property —the condo or house— not your belongings . By law and through the eyes of the insurance company your belongings are your responsibility to protect.

What is tenant’s insurance and how does it work?

Just like the landlord’s insurance policy your renter’s insurance protects you from having to pay out-of-pocket for the damage or loss of your property. Your insurance policy will define what is and what isn’t covered but usually things that are sudden and catastrophic are covered such as fires theft and storms.

You’ll be asked about your policy limit when you purchase your tenant’s insurance. This is the maximum amount you will be paid in the event of a claim – you want this amount to cover the cost of replacing all of your personal belongings. This includes your furniture clothing electronics books et cetera.  The best way to determine how much coverage you need is to add up what it would cost to replace everything you own then get an amount close to this as your coverage limit.

I have to pay a deductible when I file a claim? Why?

Virtually all insurance policies come with a deductible. A deductible is the amount you pay out of pocket when you file a claim. So If you have a deductible of $500 and your basement gets water damage from a sewer backup causing $5,000 in damage then your renter’s insurance would cover $4,500 of the cost to replace your belongings and you’d pay $500.

What if I can’t live in my rented home after a loss?

So here’s the great thing about renter’s insurance: If an insured loss renders the place uninhabitable your insurance policy should help you cover the cost of temporary housing and living expenses. There is a limit to this amount and make sure you keep all of your receipts as you’ll likely have to pay upfront. For information about this coverage check out this article.

Given all that renter’s insurance can do it’s worth the small monthly cost. Remember it’s always cheaper to pay the premium than to have to pay out of pocket to replace all your lost belongings. Talk to your broker to find out more.