Apartment Rental Insurance: What Is It and Do I Need It?

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So you are trying to figure out what renter’s insurance is and whether you need it or not.

Apartment Rental Insurance: Why Do I Need It?
If you ever purchased a home, you almost certainly obtained a property insurance policy. Home insurance is a mandatory requirement of every mortgage lender. Lenders are interested in protecting their investment in your home. Typically, home policies have two components: building and liability coverage.

Building and Liability Coverage
The building coverage component covers replacement or restoration (depending on the policy) for losses such as fire and water damage (not caused by floods), and usually a small amount of contents and personal property. The policy also covers losses that might result from someone getting injured on your property through an accident such as a slip and fall or worse. This type of insurance is referred to as liability coverage. As in all insurance policies, the amount of coverage can be adjusted based on the owner’s desire (or demand of the mortgage company). Typically, building coverage limits are adjusted to extend coverage to the full value of the home, or the cost to rebuild in the event of a total loss.

Apartment Rental Insurance
Similarly, policies exist for residents of apartment buildings. Unlike a home insurance policy, apartment residents are not covered under the building reconstruction. The owner of the building has insurance to cover this loss. The typical rental insurance policy has two components: Contents Coverage and Resident Liability Coverage.

Most landlords insist on their tenants having some minimum amount of liability coverage. Liability coverage in a rental policy generally covers damage or injury the resident might cause to other residents (subject to perils specified in the policy), and to a lesser extent damages residents might cause to the apartment building such as burns to the carpets, counter tops, or through accidental flooding. Residents who cause damage and are not covered for liability exposure could be responsible for thousands of dollars. It is a tenant’s responsibility, not your landlord’s, to pay for accidental damages you may cause. When accidents do happen, liability coverage (subject to the particular policy exclusions and limits) takes care of it. Liability policies are not very expensive; in fact, they are very affordable.

Contents coverage covers loss to your possessions for damage or theft up to the policy limits and terms of the coverage. If you don’t have contents insurance, your loss will almost certainly have to be borne solely by yourself as the landlord’s insurance policy does not cover personal possessions. It is possible to purchase liability insurance coverage separately from contents insurance; however, it is recommended to purchase both. Additionally, you cannot purchase contents insurance without purchasing liability insurance. The cost for $100,000 of liability insurance is only $12.00 per month, and the cost of a combination package with $100,000 liability insurance and $10,000 of contents is approximately $18.00 per month.  This cost varies based on locale and type of policy purchased.

Cost of Renter’s Insurance
Renter’s insurance companies are generally very flexible with their payment terms with many providing for monthly payments, and additionally, they don’t require credit check and lengthy applications. Many companies provide online applications and accompanying online payment. Renter’s Insurance is arguably just as important to the resident of a rental apartment as the owner of a home. It’s usually fast and easy to enroll, and in the case of a covered loss, can save you thousands of dollars.


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