This is a complete guide to renters insurance in 2021. If you’re currently renting or are getting ready to rent, you’ll enjoy the actionable tips in this new guide. Let’s get started.
Renters Insurance Overview
Renters insurance is one of the best and easiest ways to cover losses to personal belongings and provide protection from liability claims for anyone that is renting a home, apartment, condo, or even just a room.
Do I need renters insurance?
First things first, do I even need renters insurance? Most likely, yes, you will need renters insurance. Landlords typically require their tenants to purchase renters insurance as a condition in the lease. But even if your landlord does not require renters insurance, we still highly recommend it. Continue reading to learn about a few reasons why you should consider renters insurance.
How Renters Insurance Works
Renters insurance can apply to a variety of different scenarios beyond your personal property which is why it’s so important to make sure you are properly insured. Here are just a few example scenarios of some of the most common renters insurance claims where your renters insurance would protect you.
Common Renters Insurance Claims
Scenario 1: You leave for work in the morning and come back to a trashed and rummaged apartment. It appears your apartment has been broken into and it looks like the thief stole your laptop, tv, and a few other valuable items. Your apartment has become such a mess that you need to stay in a hotel until everything is cleaned and restored.
Scenario 2: Its game night and you invite a few friends over to your apartment. You and your friends have just finished eating dinner. While helping to put some dishes away, one of your friends slips and falls in the kitchen. Unfortunately, she scraped her arm and needs to be taken to the hospital.
Scenario 3: Every day you ride your bike to work and park it outside in front of your apartment. One day, as you’re getting ready to leave for work, you notice your bike is not where you left it. You search around the area and realize it has been stolen after finding your lock snapped in half on the ground.
What Renters Insurance Covers
There are four main areas of protection your renters insurance will provide including personal property, liability, medical payments to others, and loss of use.
- Personal property
- Personal liability
- Medical payments to others
- Loss of use
Renters insurance will protect your personal belongings in events such as fire, theft, vandalism, plumbing and electrical malfunctions, certain weather-related damage, hail, explosion, riots, damage caused by aircraft or vehicle, and other named hazards.
Liability coverage protects you up to a certain amount if you get sued for an injury or other damages incurred at your home by other people. It also pays for damage that you, your family, or your pets cause to others. Liability coverage may also pay for any court judgments as well as legal expenses, up to the policy limit, which usually starts at $100,000 and can go up to $300,000. For coverage higher than that, you need to buy an umbrella policy. Events that may be covered by personal liability include dog bites, slip and falls, swimming pool accidents, falling trees causing property damage or injury, workers injured on your property by a foreseeable hazard, and more.
This coverage can help pay for medical bills if a guest is injured in your home, for example, if someone slips on your stairs. Limits for this coverage typically range from $1,000 to $5,000.
Also known as additional living expenses (ALE), this part of your renters insurance policy will provide a way for you to pay for temporary housing if your unit becomes uninhabitable due to one of the covered perils. Hotel bills, restaurant meals, temporary rentals, and other expenses incurred while your dwelling is being repaired are all included.
What Renters Insurance Does NOT Cover
Let’s simplify what your renters insurance will most likely not cover:
- Flood damage (you’ll need a separate flood insurance policy)
- Earthquakes (you’ll need a separate earthquake insurance policy)
- Other “acts of God”
- Expensive items such as jewelry, art collections, and high-end electronic equipment
- Damage to the physical rental space
- Liability caused by certain pets or dog breeds
In general, you are covered for up to $1,500 for jewelry or other expensive items that are destroyed or lost to fire, windstorms, theft, or other perils that are listed in your policy. However, if you own valuables that are worth more than your limit, you will need to “schedule” them so you can expand coverage as needed. Contact us to learn more about scheduling property on your policy.
How much does renters insurance cost?
The most recent data in 2021 shows that the national average cost of renters insurance is $179 a year. In Washington state, the average cost of renters insurance is $160 a year. The cheapest state for renters insurance was North Dakota at $126 a year while the most expensive state for renters insurance was Mississippi at $252 a year. (National Association of Insurance Commissioners (NAIC); Dwelling Fire, Homeowners Owner-Occupied, and Homeowners Tenant and Condominium/Cooperative Unit Owner’s Insurance Report: Data for 2018).
How Much Renters Insurance Do I Need?
When purchasing renters insurance, one of the most important things you need to do is make sure you have enough insurance to replace all of your personal belongings in the event of a burglary, fire, or other covered disasters. The amount of renters insurance you need is largely dependent on your location, your budget, your lifestyle, and your assets according to their ACV or replacement cost – more on this later. To determine how much renters coverage you need, here are a couple of steps you should take:
- Create a home inventory.
Creating a detailed list of all of your belongings along with their estimated value is ultimately the best way to determine how much coverage you’ll need. Details that should be listed for each item include the age, original purchase price or current value, and any other identifying information.
- Assess your liability.
As mentioned earlier, liability coverage helps pay for in the event someone is injured on your property or someone from your household causes damage to others’ property. If you often have a lot of company over or your personal assets exceed the typical $100,000 limit, you may want to consider increasing your liability limits.
Will Filing a Renters Insurance Claim Impact My Rates?
Filing a renters insurance claim is very similar to filing a car insurance claim. There are a few things that will happen to your insurance rates as a result of you filing a claim that you need to be aware of:
- Your insurance rates may go up
- Your insurance company may drop you
Being worried about insurance rate increases is very reasonable and the reason why it is so important to determine when it is appropriate to file a claim.
When Should I File a Renters Insurance Claim?
Renters insurance is designed to protect you but determining when to file a claim in the event that you need it can be difficult. It’s important to understand that not every loss is worth filing a claim for. Very few losses should be deemed “worth it” to file a claim.
Thinking about the timing of your insurance claims is one of the best ways to choose when and when not to file a claim. Here’s why. Insurance companies expect their clients to file a claim no more than once every five to ten years. Filing two consecutive insurance claims within three years will most likely result in your policy being completely canceled. What’s worse is that other insurance companies will be able to see your claims history as well, making it even harder for you to find an insurance company that will cover you.
If you are certain that the loss you are filing a claim for is covered and you haven’t had a previous claim in the past five to ten years, filing a claim may be appropriate. As you can tell, many variables make these types of decisions difficult. By shopping for insurance with your local and independent insurance agents here at PNW Insurance Group, we will make sure you are not alone and assist you when determining whether or not you should file a claim.
Filing a Renters Insurance Claim
You’ve found yourself in a situation where you need to file a claim, so now what? Keep in mind there are two different types of claims you can file: property claims and liability claims.
Before filing for any type of claim please be sure to report the incident to the police, if necessary, and tell your landlord. Once you have contacted them, the next step is to contact your agent and inform them of the incident. Remember, it’s important to be sure that the claim you are making will be covered. Your claim will still count against you whether or not it is accepted so try to avoid unnecessary claims when possible. Always check your policy and consult with your insurance agent before deciding to file a claim.
How to file a property claim
- Document all the damage or loss with pictures and videos. Also, don’t touch the mess! Believe it or not, if a mess has been created, it is recommended that you leave it in place until your carrier sends someone to examine everything.
- Gather all necessary documentation. This may include receipts, order confirmations, and more. Everything you want your insurance company to pay for needs to be documented. Your home inventory, your policy number, damage documentation, and the police report or witness statements, if necessary.
- Keep receipts if you need to be relocated. In the event your residence has become unhabitable, the additional living expenses you incur will be covered. Just make sure to keep the receipts.
- Complete your insurance company’s claims form as soon as possible. Insurance carriers are required to send the necessary claim forms to you by the end of a set time period (this period varies from state to state) so return the forms as soon as you can to speed up the claims process (ideally within 48 hours).
- Collect your claim.
How to file a liability/medical payment claim
There are two types of liability coverage, personal liability and medical payments to others. In the scenario where your liability coverage might need to be used, you will need to:
- Give your insurance info to the opposite party.
- Document all the damage, including any witnesses that may have been present during the accident.
- Notify your insurance company of the potential claim as soon as possible.
The key to making a potential liability claim easier on you and your insurance company is to be as detailed and responsive as possible. In fact, many insurance companies typically have a 48-72 hour deadline to submit a claim once an incident occurs. Lacking detail may also result in your claim being denied. The more detailed and responsive you can be, the smoother your claims process will go.
How to Save Money on Renters Insurance
When looking for ways to save on your renters insurance, consider these options:
- Bundle your insurance
- Stay with the same insurance company
- Install smoke detectors
- Get a security system
- Increase your deductible
- Set up auto-payments
- Leverage your occupation
- Senior discounts (typically 55 years old and above)
- Review policy annually
- Compare and shop around
How to Purchase Renters Insurance
The best way to purchase any type of insurance is by first comparing and shopping around. To get a renters insurance quote directly from PNW Insurance Group, simply fill out the form below, give us a call at (253) 527-6261, or email us.
If you’ve been through the process of shopping for insurance, you’ll understand that it takes a lot more time, effort, and knowledge than you may have originally thought. This is why independent insurance agencies like PNW Insurance exist!
In addition to finding the best insurance options for you, we’ll also serve as your advocate and confidant when the time comes, and you need to put your insurance to use. But that’s not even the best part! We can do all of this at no extra cost to you! That’s right, you don’t have to pay a penny more to utilize our services. What’s the catch you say? Head over to our FAQ page if you’d like to learn more!
5 Important Renters Insurance Insights
There’s a lot more to renters insurance than you might realize. Here are just a few more insights for you to consider when shopping for renters insurance.
What is a deductible?
Your renters insurance deductible is the amount of money you have to pay toward a loss before your insurance company starts to pay a claim. The higher your deductible, the more money you save on your premium. If you can afford to raise it to $1,000, you may get as much as 25 percent off your premium.
How to avoid a denied renters insurance claim?
To maximize your chances of your renters insurance claim being accepted, here are 4 steps we recommend you follow:
- Keep an accurate home inventory. While keeping an inventory of every single item you own may be a hassle, it can save you a lot of time, headache, and money in the future. Also, be sure to be as accurate with your documentation as possible. Whether that means taking pictures and listing the exact price and model is up to you.
- List all members living in your household on your policy.
- If filing a property damage claim, make sure the hazard that caused the damage is covered.
- File your claim within 48 hours of the incident.
Named Perils Policies vs Comprehensive Policies
When it comes to insurance and personal property, there are two types of policies you should be aware of: named perils policies and comprehensive (all risks) policies. The main difference between the two is how they define specific events or “perils” that are covered by the policy.
For named perils policies, the perils that are covered by the policy will be listed. This means that if there are certain perils not listed on the policy, they’re most likely not covered. If you live in a relatively hazard-free zone, choosing a named perils policy can be a way for you to save money. On the other hand, comprehensive or all risks policies list what isn’t covered instead of what is covered. So, if something is not listed on an all risks policy, that most likely implies that it will be covered. Check with your agent to be sure.
Actual Cash Value vs. Replacement Cost
Should I choose actual cash value or replacement cost? These two different terms refer to how your personal property is reimbursed. Actual cash value (ACV) pays to replace your possessions minus depreciation (the reduction in the value of items due to age and use) up to the limit of your policy. Replacement cost pays the actual cost of replacing your possessions (with no deduction for depreciation), up to the limit of your policy. Typically, the price of replacement cost coverage is about 10% more than ACV coverage but can be well worth the extra cost.
Coverage for College Students
If you’re a college student living in a dorm and are still part of your parents’ household, your parents’ homeowners or renters insurance will most likely provide you coverage. If you live off-campus, you’ll probably need your own renters policy.
PNW Insurance Group is Here to Help
Have any additional questions or concerns? Reach out to our team of insurance experts! We’d be happy to help. We hope you found our renters insurance guide useful so if you did, please feel free to share it! It can be an extremely useful tool for those who are new to renting as well as those who have been renting their whole life!