Do I Really Need Renters Insurance? | Understanding the Importance and Benefits

Some landlords will require renters insurance while others don’t, which can leave you wondering, “Do I really need renters insurance?”

A recent survey by NerdWallet revealed that 56% of renters do not have renters insurance. Many of them cite the cost of coverage as a hindrance, but renters insurance coverage can cost less than you expect — in fact, some tenants could pay next to nothing.

Why Do You Need Renters Insurance?

Protection for Personal Belongings

One of the primary reasons why many tenants do not get renters insurance is that they presume their landlord's policy covers their personal belongings. However, this is far from the truth. Landlord insurance covers the structure of the building and not the tenant's personal possessions. In the event of a disaster, such as fire or theft, a standard renters policy will cover the cost of replacing lost or damaged belongings, including TVs, electronics, shoes, clothes, and other personal items.

Value of Personal Possessions

Another reason why renters should consider getting insurance is that they may own more valuable items than they assume. To know what coverage they need, renters should take stock of their personal belongings and tally up their value. Most will be surprised by the amount of value in their possession and understand that having insurance is absolutely essential.

Liability Coverage

Renters insurance also provides coverage for liability, which is inclusive of the legal cost of paying for any third-party damages or injuries. If you accidentally cause damage to a neighbor's apartment or cause injury to someone, your renters insurance will cover the liability costs, including legal fees and payment of a settlement or judgment amount.

Coverage for Additional Living Expenses

In the event of a disaster, such as a fire, flooding, or other natural disasters that may force you out of your apartment, renters insurance can cover the cost of additional living expenses. Most policies provide coverage for a ‘loss of use’ or ‘additional living expense,’ which will cover hotel costs, restaurant meals, and other related expenses incurred when you are not in your apartment.

Financial Protection

Renters insurance can protect your finances as well. Rather than having to pay out of pocket in case of an accident, if your dog bites someone, or a guest gets hurt while at your apartment, your renters insurance policy will pay for their medical expenses, legal fees, and other damages. Furthermore, if you're saving for a down payment on a house, or you've worked hard to get out of debt and build an emergency fund, the last thing you need is to be paying out of pocket for an accident.

Coverage for Belongings Outside Home

Lastly, renters insurance can cover belongings even when they're not inside your home. For instance, if your laptop is stolen while you are at the café, you can still file a renters insurance claim to recover the cost of the items stolen. You may also have coverage for your belonging in a storage unit.

Get Affordable Renters Insurance

In conclusion, the cost of renters insurance is not a hindrance, and it is a worthy investment. The rewards of securing your personal items and financial future far outweighs the cost of the insurance premium. By bundling your renters policy with your auto insurance policy, you may save even more as many carriers offer multi-policy discounts. While renters insurance is not always required by your landlord, it is in your best interest to purchase renters insurance, as you'll be able to rest easy knowing your personal belongings and finances are protected.

When you're ready to save, contact Family Union Insurance and we’ll shop for the best rates for you!

Your Guide to Landlord Insurance

The Importance of Landlord Insurance

The idea of taking out landlord insurance may seem daunting at first, but considering the benefits, it is usually well worth the investment. While it may not be a legal requirement, having landlord insurance could help you save from catastrophic losses that may happen when managing a property, such as a tornado or fire. Without insurance, you would have to pay the entire cost of rebuilding the property if the worst were to happen. However, with landlord insurance, you would only have to pay a small deductible, and the policy can be customized to add additional coverage for other events like vandalism or theft.

Types of Rental Properties Covered

It is important to note that, while landlord insurance applies to long-term rentals over 30 days, if you plan to do short-term rentals like Airbnb or VRBO, you will need a commercial, homeshare, or vacation rental policy instead of landlord insurance. This ensures that you are adequately covered for the short-term rental nature of your business.

Now, you might be wondering, what about when you rent to family or even just a single room in your home? In both instances, you should discuss this with your agent to see what options are available for your specific situation. It’s wise to have landlord insurance, regardless of whether you are renting out to strangers or someone you know personally. You might also be able to add a home sharing endorsement on your current homeowners policy. Disclosing that you’re renting out part of your home and having a policy in place that can protect both you and your tenant in case of an accident, damage is important.

Types of Landlord Insurance Policies

When it comes to coverage, landlord insurance offers three types of policies, known as "dwelling policies." The basic DP-1 policy is a very limited coverage policy. The payment amount from this policy would be significantly less than the landlord's cost to repair the damage, and the landlord would have to make up a large difference out of pocket, but the premium will be much lower than other options. The most popular policy is DP-3, which provides comprehensive coverage, while the policy DP-2 offers moderate coverage.

Differences Between Homeowners and Landlord Insurance

There are some key differences between homeowners and landlord insurance policies. For example, while both policies cover building, liability insurance, loss of use/rental income, personal property, medical payments, and other structures, the amount of personal property coverage varies. A homeowner's policy will usually cover up to 50% of the home's insured value, while a landlord policy will often not offer any personal property coverage unless an additional premium is paid to cover appliances and furnishings. It's important to note that personal property coverage under landlord insurance does not protect the tenant's property, as they would need renters insurance for that. Additionally, the homeowner's liability covers you for personal liability that's non-business related, but landlord's liability coverage only applies to losses related to the rental. You would need separate business insurance for general liability protection.

Get Landlord Insurance with Family Union Insurance

When you’re ready to look into landlord insurance, Family Union Insurance is here to help match you with the best coverage for your specific situation. We work with many carriers that provide customizable landlord policies