It is the question that is on everyone’s lips: What is rental insurance? And what exactly does rental insurance cover?
That the name itself can be confusing doesn’t help; It is often not clear that rental insurance also covers your valuables – computer, iPhone, bicycle, diamonds, etc. – even when you are not at home.
Many people think that renter’s insurance is not worth it. Maybe they cross their fingers and hope nothing happens to them, in which case they’ll be glad they didn’t “waste” a few bucks a month on this coverage.
And of course, that’s true if your phone has never been stolen, or if a burst pipe in your apartment doesn’t destroy your expensive sofa. But if bad luck hits you, you’ll probably be very glad you decided to splurge on a rental insurance policy.
What we’re going to do in this article is break down the basics of rental insurance, without any technical jargon. We like to keep it simple. You will learn how these policies can make your life easier.
What is rental insurance?
Simply put, renter’s insurance offers you financial help if bad things happen to you or your things. In return, you pay monthly premiums (known as a “premium”) to your insurance company. Consider renter’s insurance as a safety net. It will spring into action and help you if loss and damage occurs from designated “perils,” including theft, fire, vandalism, certain types of water damage, and many other inconveniences.
We say that an insurance policy “covers” you from unfortunate incidents, such as fires or bites from an out-of-control dog. But that’s just an expression, as the insurance company doesn’t prevent these things from happening… but provides financial support if they do.
If your entire apartment is damaged to the point that you can’t stay there, renter’s insurance may compensate you for the nights you have to spend in a hotel. And if you are injured at someone else’s house, or if another person is injured at your house, it will even help you with the possible derived expenses.
You probably didn’t know that all those useful things were lumped together under the misleading name of “rental insurance”…
What does rental insurance cover?
So now you know what rental insurance is and you have finally decided that it suits you. (Good decision). Next we will learn what your monthly payments cover. It’s fair to say that rental insurance policies probably have a lot more advantages than you thought.
But what does rental insurance really cover? A typical rental insurance policy has three main categories of coverage:
This type of coverage helps you recover the cost of lost or damaged valuables if the unexpected happens.
Standard policies cover very unfunny occurrences like kitchen fires, lightning, windstorms, hail, smoke, vandalism, theft, frost, aircraft or vehicle damage, and riots, to name a few.
So if a fire in your kitchen destroys your belongings, or an embittered ex-boyfriend breaks into your house and steals your vinyl record collection, you’re covered. You just have to keep in mind that if the things in your apartment belong to your landlord, they are not covered by your policy. That means the furniture that came with the apartment, as well as certain appliances.
You now have a pretty good idea of what rental insurance covers. But what if you want to increase the coverage of certain specific items that are especially valuable? In insurance terms, this is known as adding scheduled personal property coverage.
Your basic renter’s policy protects your electronics and appliances against certain “perils,” but not against all types of damage. For example, if your washing machine has an electrical failure, your basic policy will not help you.
Temporary Living Expenses
If covered perils make your home uninhabitable, you may have to take refuge in a hotel for a while. The good news is that most rental insurance policies cover these and other expenses, possibly including money you need to spend on food and laundry.
Rental insurance coverage extends to cases where someone is injured in your home in an accident, either in the form of hospital bills or legal fees from a lawsuit. It also extends to certain damages that you may cause when you are away from home.
What does rental insurance not cover?
Rental insurance is very good, but it is not an invincible cloak. It won’t protect you against all the bad things that can happen on a day-to-day basis, so it’s good to know what your policy doesn’t cover.
Natural disasters such as floods or earthquakes
Is your apartment in a place where floods, sinkholes or earthquakes are common? Basic rental insurance does not usually cover damage caused by these natural catastrophes.
Keep in mind that certain natural catastrophes – such as a volcanic eruption, forest fire or tornado – are covered by a rental insurance policy. But the damages and expenses of certain events – such as widespread power outages – will not be.
car related theft
You park your Volvo around the corner and leave your phone on the passenger seat. If someone takes your iPhone X by force, rental insurance covers the device. But rental insurance will not cover damage to the car itself (that broken window). The same goes if some drunken prankster decides to rip your rearview mirror off for fun. In fact, rental insurance doesn’t cover “motor vehicles” in general, and that goes for things like electric bikes or electric scooters too… sorry, e-bike fans.
Although we trust you and know that you would never lie or misrepresent anything, the insurance company requires some form of proof that the item you are claiming for actually existed and was in your possession. Save receipts, if you can think of it, or try taking photos of your valuables on your phone (save them in the cloud, too, in case your phone itself is stolen).
Your roommate’s belongings
You are super responsible and have rental insurance. But you live with three other companions who do not have it. If their things are damaged or stolen, your policy can’t come to their rescue (unless one of them is a blood relative, your spouse, or an adopted child). If your roommates aren’t up to speed on why renters insurance is such a great idea, well… you can convince them yourself after finishing this article, right?
Sorry, rental insurance does not cover damage caused by mice, rats or insects. If rodents eat all your food, or termites destroy your dresser, your policy won’t help you. Neither will extermination expenses be covered, which are usually the responsibility of the owner. And what about that plague of all plagues, whose name we almost resist pronouncing… bedbugs? Treatment can be really expensive and time consuming, and renter’s insurance won’t cover the cost.
Property damage to your physical home
Rental insurance does not cover the physical building that houses your things. That’s what your landlord’s insurance is for. So if the building has a leaky roof, it is your right as a tenant to demand that your landlord provide you with a dry roof. Before signing a rental agreement, it is worth asking about the landlord’s insurance, as well as what their protocol is in case something happens to the actual structure of the house.
Some misconceptions about renter’s insurance
Let’s take a look at the most common mistakes about rental insurance.
- You may think that, since your landlord has insurance, that it covers damage to your things. But it’s not like that. Your landlord’s policy covers the physical structure of your building and the furniture/devices that the landlord may have inside, such as the refrigerator or the kitchen… but it does not cover you or the damage that your MacBook, your camera may suffer digital or your bike.
- It may be your first time living on your own, and your parents have home insurance. Well then, it’s time to start being an adult… Your parents’ policy won’t cover you or your things in your new apartment.
- You may think you don’t have many valuables – you don’t own expensive art or jewelry, for example – so why bother buying rental insurance? But once you add up the more common items, you realize you actually have quite a few things, and it would cost you dearly if anything bad happened to them (think insurance on your phone, laptop, bike, etc.).
- Isn’t renter’s insurance too expensive? Nice try… rental insurance policies can cost as little as 3 euros/month, so it’s not a good excuse to skip coverage.
- Maybe you’re one of those people who only heads home to sleep after a long day at work (or a long night of play). Why buy rental insurance if you’re basically never in the apartment you rent? The reason is that your policy covers your back whether you are at home or in a bar, a cafeteria, an airport, a party boat, a park, a shopping center, a subway car, an outdoor party, the office from a therapist… you get the idea.