Lisa, who has renters insurance in San Diego, CA, writes us to ask a common question,
What is renters insurance? I sort of understand it, but I don’t really know what renters insurance does for me and now I’m being told to get it. I’d like to know what I’m buying.
What Is Renters Insurance?
What is renters insurance? How does renters insurance work? What do the different coverages mean on renters insurance? Learn how and why you’re protecting yourself with the renters insurance experts.
Lisa, that’s a great question and one we get frequently. Let’s take a trip down Renters Insurance Road and find some answers for you! First things first, renters insurance is a type of homeowners insurance policy. It’s basically a standard homeowners policy with the dwelling or structure coverage stripped out. If you laid the two policies side by side, that’s the primary difference you’d notice.
But what does that mean exactly? That doesn’t really answer the question of what is renters insurance. There are several different types of protection available from renters insurance and they all work together to create a complete package of protection in the event of a loss. Let’s take a look at an example.
What Is Renters Insurance, In The Context Of A Fire Loss?
What is renters insurance? We’ll use the example of a fire which was negligently caused by the policyholder. As is unfortunately all too common, the policyholder left something on the stove when he went out. That, of course, led to a fire. The policyholder had left, but his out of town guest was still there and able to get out safely. In the process of escaping through a window, the guest received a few minor lacerations from the broken window glass. Who pays for the care? Since it’s minor, it would likely fall under Medical Payments To Others coverage. That’s a no-fault coverage for when someone is injured in your home. Unlike liability, you don’t have to determine fault to use it.
Speaking of liability, where does that come into play? The policyholder had a standard $100,000 of liability to cover bodily injury or property damage to others. Others, of course, includes the apartment community. Since commercial insurance deductibles are high, this incident didn’t rise to that level. The fire was put out quickly, but a new stove, paint, and cabinets will all be required. Liability would pay that cost to the property, if they held the resident to be at fault for the incident. But, liability also pays for the smoke damage to the common hallway, and the water damage to personal property in another unit. The coverage can make multiple payments to multiple injured parties.
You also have personal property coverage, which protects your stuff from fire, theft, vandalism, and common perils listed in the policy. This means that the dishes in the cabinet above the sink, the pan that caught fire, the clothes damaged by smoke, etc. are all covered under personal property. This coverage protects you when a covered loss occurs and helps you replace lost or destroyed items.
In this instance, loss of use coverage would also be instated while the apartment is being fixed and is not usable. It pays for things like hotel expenses and meals that might normally be cooked at home while the kitchen is being rebuilt. This is an important aspect of coverage because very few people can spend a few weeks in a hotel on zero notice should they suffer a fire or similar loss.
So What Is Renters Insurance, Anyway?
Renters insurance isn’t just one coverage. It’s a collection of coverage that helps to provide for your safety and security when the worst happens. It’s comfort in knowing that if your neighbor causes a loss, his policy can make good on it. It’s comfort in knowing that your policy will do the same for others, if they’re affected by your accidental negligence. What is renters insurance? It’s something that every renter should have, because life just has too many moving parts to predict.