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Do I Need Renters Insurance

Before you sign a lease on a new apartment or home, the chances are good that the landlord will require you to buy renters insurance. And even if the landlord does not insist on coverage, you still should purchase a policy.

Many people ask the question, should I get renters insurance for an apartment?

Whether you are renting a house or an apartment, the answer is an emphatic yes. There are many benefits of renters insurance that we’ll cover here.

Read on to learn why you need renters insurance.

Is Renters Insurance Required by Law?

No. However, in most states, landlords can have their own renter's insurance requirements and require renters insurance before signing a lease.

Oklahoma is the only state where this is not true, although, in some states, there may be limits on how much insurance a landlord can require. For example, Oregon landlords can only require tenants to have $100,000 in liability.

But even if your landlord doesn't require renters insurance, it is a wise decision. This type of coverage reimburses you if personal items are damaged or stolen, and it protects you if you injure someone else or destroy their property.

What Does Renters Insurance Cover?

Many people mistakenly think their landlord's insurance policy covers any damages that happen to a tenant's possessions. But this is not true. You must purchase your own policy for such protection.

A typical renters insurance policy offers three major types of coverage:

Personal Property Coverage

As with homeowners insurance, most renters insurance policies reimburse you for losses of your possessions that are due to perils such as:

  • Fire and smoke
  • Lightning
  • Theft and vandalism
  • Explosions
  • Windstorms
  • Some types of water damage

The policy itself will spell out which types of disasters it covers.

Liability Coverage

The liability portion of a renters insurance policy protects you when you are responsible for damages to other people or their property. For instance, if someone slips and falls at your apartment, or your dog chews up their expensive drapes -- or worse, bites them -- this portion of the policy will reimburse you for fixing the damages or protect you in the event of a lawsuit.

Protection against lawsuits is a particularly valuable part of liability. This type of coverage will reimburse your legal costs, plus cover any court damages for which you are responsible up the limit of your liability coverage.

Finally, the liability portion of your policy provides no-fault medical coverage. This means if someone hurts themselves on your property -- or, for instance, your dog bites them and the wound requires a doctor’s care -- your policy will pay their medical bills.

Additional Living Expenses Coverage

In addition, renters insurance policies usually offer additional living expenses or loss of use coverage. This kicks in if your rental unit is destroyed or severely damaged and you need funding to secure a new place to live while the rental unit is being repaired.

In most cases, you are covered for an amount equivalent to the difference between your normal living expenses and the additional expense of securing temporary quarters. Additional living expenses might cover costs such as:

  • Hotel bills
  • Rentals on a temporary basis
  • Restaurant costs

What Kind of Things Does Renters Insurance Not Cover?

While renters insurance offers robust coverage that protects you in the wake of mishaps, there are a few things it does not cover.

It is crucial to note that a renters policy will not protect you from flooding damage. For such protection, you need to purchase a separate flood insurance policy.

Earthquake coverage typically is not a part of a renters insurance policy either. But you may be able to purchase a rider -- at an additional expense -- that covers earthquakes.

Some people are also confused about how liability coverage works. This portion of your policy protects you from damages you cause to others and their property. On the other hand, liability coverage does not extend to you or your family members.

So, if your dog bites someone else, you are covered. If your dog bites you or your son, renters insurance will not help.

How much renters insurance do I need?

It can be tricky to figure out how much renters insurance coverage you need. But a little homework will help you drill down on the amount of coverage that is right for you.

How Much Personal Property Coverage Do I Need for Renters Insurance?

It is normal to ask, “How much personal property coverage do I need for renters insurance?” Determining this amount takes work, but with our expert tips on how to create an inventory list for home insurance, it shouldn’t be too difficult.

Your best bet is to create a personal inventory of your possessions and assign value to these items for personal possessions coverage. The Insurance Information Institute says some of the items in this inventory should include:

  • Appliances and electronics
  • Clothing
  • Furniture
  • Other items ranging from kitchen utensils to towels and bedding

After adding up the replacement values you have assigned to these items, you should have a rough idea of how much coverage you need.

Remember that some items -- such as expensive jewelry and artwork -- may require you to purchase a separate rider to cover their value. Speak to your insurance agent about whether you need such a rider.

How Much Liability Coverage Do I Need for Renters Insurance?

Most renters insurance policies include somewhere between $100,000 and $300,000 in liability coverage. This may sound like a lot, but imagine a worst-case scenario where someone loses their life on your property due to your negligence. In such circumstances, you could be sued for $1 million or more, and your liability coverage would be a drop in the bucket.

If your renter's insurance policy's liability coverage seems inadequate, consider supplementing the coverage with an umbrella policy. This form of coverage can provide you with an additional $1 million or more in liability protection.

Frequently Asked Questions About Renters Insurance

Does California Require Renters Insurance?

Renters insurance is not required in California. That may lead you to ask, “Well then, is renters insurance necessary?” But just because coverage is not required doesn’t mean it’s a good idea to skip purchasing a policy.

In fact, the California Department of Insurance flatly says that "you should consider purchasing renter’s insurance," noting the many coverages it provides.

Although the state does not require you to purchase a policy, landlords still can require you to have a policy in place before you sign a lease.

How Much Renters Insurance Should a Landlord Require?

Many experts recommend that landlords require tenants to purchase renters insurance before leasing a rental. Not only does this protect the tenant’s interests, but it eliminates the possibility of disputes should a tenant suffer a loss and demands that the landlord reimburses the tenant for the loss.

Landlords have to make their own decision about how much insurance they will require tenants to carry. If you are unsure, consult with your insurance broker. Remember that in one state – Oklahoma – you cannot require tenants to carry insurance. In other states, there may be limits on how much cover you can demand.

Do I Need to Add my Landlord to my Renter's Insurance Policy?

Many landlords will require that they be listed as an "additional interest" on your renter's insurance policy. This common requirement lets them be notified if a policy lapses or is canceled. It does not give the landlord any coverage under your policy.

Listing your landlord as an "additional insured" is something different. This means the landlord also is covered by your policy. Many experts say this creates additional headaches that are best avoided. And your insurance company may not allow you to do this anyway.

Should I Get Renters Insurance For an Apartment Even Though My Landlord Has Insurance?

The reluctance to buy a policy is understandable. No one likes to spend money if they do not have to.

However, a renters policy is affordable, and it’s almost always a good investment in protecting your financial future. Remember, your landlord’s insurance does not cover your possessions or protect you against liability judgments. The only way to get such protection is to purchase renters insurance.

What Happens If You Don't Have Renters Insurance?

If renters insurance is part of your lease agreement and you do not maintain it, your landlord may terminate the lease.

If renters insurance is not required by your landlord and you choose not to get it, if there is no peril or accident that results in the need for insurance coverage, you won't likely miss it. But that is taking a big and potentially unwise risk with your financial well-being. If damage occurs to your property or someone is injured in your apartment and sues you, you could suddenly be facing financial devastation. There is peace of mind knowing you're covered for mishaps life may throw your way.