Last Updated on 2023-07-01
Renters insurance is a type of insurance that protects tenants’ personal property and liability. Although there is no legal requirement for tenants to purchase renters insurance, it is still lawful for landlords or property management companies to require it. It is important to confirm the rental agreement before signing.
Why do you need renters insurance?
- Landlord’s insurance typically only covers the overall structure of the property, common areas, and premises. It does not cover losses to a tenant’s personal property caused by factors such as fire, natural disasters, or theft.
- If damage is caused by the tenant, such as damage to kitchen equipment due to a cooking fire or burst pipes due to the tenant accidentally turning off the heating in winter, the tenant may be responsible for the repairs. Even if the landlord’s insurance covers the damages, the landlord may seek reimbursement from the tenant for their deductible and increased premiums.
- To avoid disputes. Regardless of unexpected accidents, negligence, or other factors, having renters insurance can provide peace of mind regarding personal property losses and potential liability.
- Due to lease requirements. Rental agreements often include provisions for tenants to purchase renters insurance. Some landlords may request to see proof of insurance or a copy of the insurance declaration. However, even if the contract stipulates the obligation to purchase insurance, many landlords do not enforce it, as most accidents primarily result in losses for the tenant.
Additional Interest
Some landlords may require tenants to list them as an additional interest on the insurance policy. If the policy lapses or is canceled, the insurance company will notify the additional interest (the landlord) immediately. It is important to note that “additional interest” is different from “additional insured,” as the latter pertains to roommates, family members, or others who live with the tenant and wish to be covered by the policy. Listing the landlord as an additional insured would result in losing the right to seek compensation from the landlord.
Insurance Coverage
Standard renters insurance typically covers the following categories:
- Personal Property: Refers to the tenant’s personal belongings, including furniture, clothing, and appliances. However, valuable items may require separate coverage, such as cell phones, electronics, musical instruments, sports equipment, jewelry, watches, etc. Some policies may cover belongings that are temporarily outside of the rental premises, subject to the terms of the contract.
- Liability: Covers economic losses to others (landlords, friends, neighbors, pedestrians, etc.) caused by the tenant’s negligence or within the rented premises, including property damage and medical expenses. For example, water pipe blockage causes flooding in their property or a slip and fall accident due to failure to clear snow in front of a house.
- Loss of Use: If the rental premises become temporarily uninhabitable due to covered perils, such as electrical or heating system failure, the insurance company may cover expenses incurred for temporary living arrangements, such as hotel costs.
- Medical Expenses: Covers medical expenses for others injured at the tenant’s residence, regardless of tenant negligence. For example, a friend who gets injured while visiting and requires emergency medical treatment.
Exclusions
Most renters insurance policies exclude coverage for the following situations:
- Floods
- Earthquakes
- Landslides
- Mold
- Water damage other than from plumbing or appliances
- Pest infestations
- Foundation settlement
- Pet damage
- Wear and tear Intentional loss
- Nuclear incidents
- Government actions
In Pittsburgh, occasional heavy rainstorms can occur, especially if the rental property is located in a flood-prone area. In such cases, it may be advisable to consider purchasing additional flood insurance.
Insurance Premium
Using the AllState 2021 policy as an example, the annual premium is $184 (approximately $15 per month).
How to Choose Renters Insurance
When selecting renters insurance, consider the following points:
- Choose the Personal Property coverage amount based on the value of your personal belongings. If you don’t have musical instruments, sports equipment, jewelry, or watches, you may not need to purchase this coverage.
- Opt for a lower coverage amount if you have minimal possessions. Typically, Liability coverage limits range from $100,000 to $300,000.
- Select a reasonable deductible. A lower deductible results in higher premiums, and vice versa.
- Carefully consider whether to share renters insurance with roommates. While it can save money on premiums and allow for splitting the cost, any claims filed by one person will appear on your insurance record for three years.
- If you have a car, bundling renters insurance with your auto insurance can provide significant discounts. Compare quotes from multiple providers.
- Check with large insurance companies such as Allstate, Amica, AAA, Lemonade, etc.