While most people know how important it is to have homeowner’s insurance, many never stop to consider whether renters also need to protect themselves.
Many tenants assume that they don’t need renter’s insurance. Most people who rent apartment units or other housing mistakenly assume that the landlord's insurance policy will cover liability and the loss of their personal property after a devastating event or hazard such as, a fire, flood, theft, dog bite etc. The reality, however, is that renters are not automatically protected by the landlord’s insurance policy. The landlord’s policy will cover only what the landlord owns, and that will be limited to the land and the physical structures on it. Anything inside the building that the tenant owns will be excluded by the landlord’s insurance company. The landlord will only be reimbursed for the structure itself, not the renters' belongings. This is why renters are strongly encouraged to purchase a protective policy called renters insurance.
Renter's insurance coverage has two parts:
- The first part is 'general coverage or contents' of your personal possessions from theft or damage.
- The second part is 'liability coverage' against financial loss resulting from injury to a visitor to your home or apartment. Depending on your insurance policy, this often includes visitor's medical costs, plus legal and other associated costs should you be sued.
What does renter's insurance cover?
- Your possessions will be protected from theft and vandalism.
- Your possessions will be protected against damage from specifically-named risks such as fire and windstorm.
- If there is damage to your rented apartment or house and you are not able to live there, many renter's insurance policies will provide for temporary relocation living expenses while repairs are made.
- Your possessions will be protected away from your home, such as items in your car, or items you take with you while on vacation.
Remember: Renter’s insurance is a type of insurance that protects the renter, as well as their property. Just like other forms of insurance, customers will choose their amount of coverage and deductible, and be then required to pay a premium based on these, as well as a few other, factors. Ask your insurance representative about the exact coverage in any policy you consider.
Michigan State University Extension offers financial management and home ownership education classes. For more information of classes in your area, go to either the MSU Extension events feed or MI Money Health.