Rental insurance is generally described as a type of insurance policy that is typically issued to persons who reside in apartment units and other sorts of rental properties. A rental insurance policy is specifically intended to provide coverage for a tenant whose personal property is damaged or lost due to some kind of incident.

As such, a tenant may want to purchase rental insurance to guarantee they will be reimbursed in the event that something happens to their property.

For example, if the apartment building that you live in catches fire and burns to the ground while all of your possessions were still inside, rental insurance may cover a portion of the property that you lost in the fire. In contrast, a landlord’s insurance coverage will only pay for the damage that is done to the actual structure or is caused by the landlord themselves.

Otherwise, unless a tenant can prove that their landlord is directly responsible for causing their property to become damaged or lost, then they will not be able to hold the landlord or the landlord’s insurance company liable for their damaged or lost property. This is why it may be a good idea to purchase rental insurance if you live in an apartment or on another rental property.

Why is Renter’s Insurance Important?

As discussed above, having a rental insurance policy is extremely important for persons who are considered tenants or renters. This is because a renter may face significant financial risk in the event that someone or something destroys their personal property and/or it gets lost. For instance, if someone breaks in and robs a tenant’s apartment of all their personal belongings, this could cost the tenant upwards of thousands of dollars to have it be replaced.

A renter may also want to consider purchasing a rental insurance policy since it serves to protect renters from liability if an external party suffers an injury on their premises. For example, if a renter has friends over and one of their friends trips on a rug and cracks their tooth, depending on the circumstances, rental insurance can cover any damages; especially, if the renter’s friend decides to sue them for their injuries.

What Does Rental Insurance Cover? What Is Excluded from Coverage?

As is the case with any type of insurance policy, what a rental insurance policy actually provides coverage for will vary based on the insurance company, the type of policy that was purchased, what the parties negotiated for (if any terms) in the policy, and the amount of coverage that a renter purchased.

Generally speaking, however, a rental insurance policy will usually indemnify a renter against liability like if a guest visits and is unintentionally injured while on their property. A rental insurance policy will also help to replace or reimburse a renter for any property that was stolen, lost, or destroyed in an incident that is covered by the terms of the policy.

For example, if a renter purchased an insurance policy that covered up to a large amount of damages, they may be able to be reimbursed or have their expensive personal belongings replaced if they were stolen during a robbery.

On the other hand, a renters insurance policy normally will exclude the following events from coverage:

  • Losses that result from using a residential property for a commercial purpose;
  • Injuries that arise due to a tenant’s intentional conduct;
  • Loss or damage done to property that is caused by a renter’s own behavior, such as engaging in a destructive or dangerous activity; and/or
  • Damages that stem from faulty wiring or plumbing that was installed by an unqualified or unlicensed worker.

Should I Have Rental Insurance?

As with anything in life, there will be some pros and cons to purchasing rental insurance. Some benefits of purchasing a rental insurance policy include the following:

  • It offers protection against liability and legal risk if a person gets injured while on a renter’s property;
  • It can provide a set amount of coverage for personal belongings that are damaged or lost during incidents like certain natural disasters;
  • It may be required by a renter’s lease; and
  • All things considered, the monthly premiums on most rental insurance policies are relatively cheap compared to other types of insurance policies and the advantages that come with purchasing such a policy.

On the other hand, some downsides to purchasing a rental insurance policy include:

  • The time it may take to assign a value to personal possessions, so that a renter can buy the appropriate amount of coverage;
  • Most renters insurance policies require that a renter meet a certain deductible before they can be reimbursed by a renters insurance company; and
  • If a renter does not own anything of heightened value or live in an area where natural disasters frequently occur, it may be viewed as an unnecessary monthly expense.

How Much Rental Insurance Should I Buy?

The amount of rental insurance that a tenant should buy will depend on the amount that they think would be sufficient to cover all of their personal property in the event that it was lost or damaged.

In most instances, a policy that covers up to $50,000 in personal belongings will usually be enough. The only reason that a person should purchase a larger amount of rental insurance coverage is if they own very expensive items like antiques, jewelry, or family heirlooms.

However, it is important to remember that rental insurance covers more than just damaged or lost items of personal property. It is also used to cover renter insurance disputes. Thus, if a friend is injured in a renter’s apartment, the amount of coverage that a policy provides will be the amount that the renters insurance company pays out if the injured friend is successful in suing the renter for damages.

Does My Landlord’s Insurance Cover My Losses or Liabilities?

As previously mentioned, a landlord’s insurance only covers a tenant’s losses or liabilities in a renter insurance claim in two situations. The first of these two scenarios is if the landlord is personally and intentionally liable for causing a tenant’s property to become damaged or lost.

The second of these two scenarios is when it relates to the overall structure of the rental property or common areas that are shared throughout the buildings, such as staircases or hallways.

Other than these two scenarios, a landlord’s insurance will not typically cover a renter’s losses or liabilities. This is especially true in cases where a renter’s conduct was negligent or reckless.

Does My Roommate’s Insurance Cover My Losses or Liabilities?

Just because one roommate purchases renters insurance does not necessarily mean that it will cover any losses or liabilities suffered by other roommates in the apartment. The majority of renters insurance companies require that tenants specify who should be covered by a policy.

As such, if a roommate only purchased rental insurance for themselves and did not add anyone else to their policy, then no one else’s property will be covered under the policy except their own.

In contrast, if the roommates structure the terms of their policy to include everyone living within the apartment or put their roommates’ names on a single renters insurance policy, then the property of any roommates listed would also be covered under that particular policy.

Do I Need a Lawyer?

It is usually not necessary to hire a lawyer to purchase a renters insurance policy. However, if there is a dispute over a claim or if you think that your renters insurance company denied your claim in bad faith, then it is strongly recommended that you speak to a local financial lawyer about your renters insurance issue as soon as possible. An experienced financial lawyer can help guide you through the process to recover any damages that you may be owed.

Your lawyer can also communicate with a renters insurance company on your behalf and can provide representation in court if a dispute should go to trial. In addition, if you have general questions or concerns about renters insurance laws in your area, your lawyer will be able to properly respond to your questions and address any concerns you may have about renters insurance as well.