Renters insurance is similar to homeowners insurance, but it’s for people who rent their residence. Coverage provides protection for the renter’s personal property damaged in disasters such as fire, theft and vandalism. A renter does not own their property, so the insurance does not cover the dwelling – only its contents. Most renters are eligible for this insurance, be they tenants of apartments, condos or homes.
Renters insurance works like most other insurance, in that the policyholder pays a monthly premium for coverage. Renters have insurance options based on how much personal property they want to protect. The final cost of their policy depends on the value of their personal property. The premium is higher for more in-depth protection. Tenants can also get coverage for specific items, like a wedding ring or other valuable item. Each item added will increase the cost for coverage. Premiums vary as well depending on events the tenant wants protection against. For example, there may be an additional premium for flood protection.
Renters should keep in mind that there’s also a deductible. The deductible is the amount the renter pays in the event of a claim. Choose carefully because a higher deductible results in a lower monthly premium. But a lower deductible means a higher monthly premium.
The final thing to consider when purchasing a policy is payment frequency. For most plans, premiums are less expensive when paid yearly as opposed to paying smaller monthly amounts.
In the event of damage, the policyholder makes a claim to their insurance policy. After the policyholder pays the deductible, the insurance company covers the remaining cost of the damage.
Damage from fire or flood is usually quite a significant expense. Renter coverage can significantly decrease the burden on the renter.