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Renter’s Insurance 101: Why You Need It and What It Covers

As a renter, any number of problems can arise during your tenancy. Fire or water damage might make your rental unlivable, denying you a place to stay during the repairs. A burglar might break into your car and steal your laptop. Or you may accidentally damage your unit in a way that you can be found liable for in court. In any of these circumstances, you’ll be grateful to have renter’s insurance. It can cover a wide range of potential issues for renters, giving both you and your landlord peace of mind during the extent of your tenancy.

So what does renter’s insurance cover, and why do you need it? Let’s dive in.

Why Do You Need Renter’s Insurance?

You have insurance for your car just in case you get in an accident. You have insurance for your health to cover any surprise medical bills. So why shouldn’t you have insurance to cover the potential pitfalls of renting? For a low monthly fee, you can protect yourself from several practical and financial issues that could wreak havoc on your budget and life.

In addition, many landlords may actually require their tenants to invest in renter’s insurance as a condition of renting from them. While landlords have their own insurance, these policies often don’t cover the issues which affect renters the most. Having renter’s insurance protects you from bearing the cost of unexpected expenses from damage or loss of use, and it also helps your landlord be sure that any property damage will be covered by insurance if you can’t afford to pay for it yourself.

What Does Renter’s Insurance Cover?

The specifics of what rental insurance covers can be confusing, since this type of policy offers broad coverage over a number of issues. There are three main categories that renter insurance handles: property, liability, and loss of use. Here’s what each of those entails.

Property

Home is so much more than just four walls and a roof. It’s also the personal belongings you collect over the years that allow you to live comfortably and make a rental your own. So what happens if your personal property is stolen or damaged? If you have renter’s insurance, your policy will help cover the cost of the replacements so you can get back on your feet and make your rental feel like home again.

Your personal property coverage extends to almost everything in your rental. Furniture, electronics, and small knick-knacks are all protected under the umbrella of your renter’s insurance. And the coverage doesn’t stop at your rental’s door–if your property is lost, stolen, or damaged in a vehicle, storage unit, or while you’re traveling, renter’s insurance can still come to your rescue.

The fact that renters are nearly twice as likely to suffer burglary as owners makes renter’s insurance even more critical.

Liability

Not everything always goes to plan. In some cases, you might cause damage to your rental unit that your security deposit cannot cover. Let’s say your latest cooking experiment gets out of hand and causes smoke and fire damage to your rental kitchen. In that case, your landlord can take you to small claims court, and you may be found liable to cover the damages. However, your policy can help cover the costs if you have renter’s insurance. This can protect you from thousands of dollars in repair costs.

Additionally, your renter’s insurance extends to cover medical liability for injuries sustained in your rental. Here’s an example: let’s say your lease requires you to clear ice and snow off your rental’s front steps. But if you neglect to tend to that maintenance and your mail carrier slips and gets hurt, the court might find you liable for their medical bills due to your negligence. Most basic renter’s insurance policies cover up to $100,000 in liability expenses, but you can often increase your coverage to $1 million depending on your needs.

Loss of Use

Let’s return to the example of the cooking disaster that caused fire damage to your rental. If the damage is extensive enough, you may not be able to stay in the unit until repairs are complete. In that case, you could find yourself without a place to stay for days or weeks. Without renter’s insurance, you would be responsible for covering the costs of your hotel or other lodging until your unit is safe again.

But with insurance, your increased living expenses are covered under your policy—and that includes more than just hotel bills. Extra gas, restaurant bills, and any other additional costs as a result of not being able to occupy your unit can all be covered under your policy. While not being able to stay at home can be a stressful experience, renter’s insurance smooths the way and prevents an unfortunate situation from becoming an additional financial burden.

Can You Apply for a Rental Without Insurance?

You may not be required to have renter’s insurance for every rental. However, requiring this insurance is becoming more and more common. A Portland city ordinance, ORS 90.392, recently made some adjustments to the legality of renter’s insurance in our city. Now landlords can legally require their tenants to have renter’s insurance but must also maintain comparable liability insurance. They also cannot require a tenant to maintain renter’s insurance if their household income is equal to or less than 50 percent of the area’s median income. For more information on what ORS 90.392 stipulates, check out our breakdown of that specific law.

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