What are the different types of tenant insurance?


Tenant insurance protects individuals from general losses and liabilities they face when renting a house or apartment. A standard policy offers three types of tenant insurance cover for different situations.

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Although tenant insurance is not required by law, it is beneficial to anyone who rents. Tenant insurance covers your legal and financial responsibility in the event of a covered claim such as a fire. When compared to other types of insurance, tenant insurance is usually very affordable with an average premium of $ 179 per year.

What does tenant insurance cover?

Standard tenant insurance includes coverage of your personal effects, liabilities, and temporary accommodation if your home becomes uninhabitable. Most renter insurance policies include named hazard coverage and cover your personal effects at real cash value (ACV).

[ Read: Is Renters Insurance Worth It? ]

The insurance coverage for tenants is comprehensive, but does not cover everything. You may need to purchase more coverage in the form of additional policies to fill any gaps in your coverage. Some common tenant insurance policies are flood insurance, earthquake insurance, and valuables for jewelry, art, and electronics. Adding these guidelines increases your premium, and some endorsements have a separate deductible.

What types of tenant insurance are there?

There are three types of tenant insurance included in a standard policy. Here is a brief overview of each coverage and its purpose.

Personal property coverage

Personal property coverage protects your personal effects, such as furniture, small appliances, and clothing, from certain types of loss. Most tenant insurances cover your belongings against named hazards that are listed on your insurance policy. Named hazards typically include the following losses:

  • Fire, lightning and smoke
  • Storm and hail
  • Explosions
  • Riots
  • Damage from planes and vehicles
  • vandalism
  • theft
  • Volcanic eruption
  • Falling objects
  • Snow, ice and sleet
  • Sudden or accidental leakage of water or steam
  • Sudden or accidental freezing of pipes
  • Sudden or accidental voltage spikes

One of the greatest advantages of renting insurance is that it covers your personal effects anywhere in the world. So if you go on vacation in Europe and your backpack is stolen, your rental insurance will reimburse you for a new one. It also covers your items at work and in your car.

Renters should note that this type of policy offers limited coverage for valuables. If you own a fine jewelry collection, have furs in your closet, or have a lot of cash on hand, your rental insurance is unlikely to cover them if something happens. If so, you would need to purchase a notice to increase your policy limit or plan your valuable items.

[ Read: How to Buy Cheap Renters Insurance Online]

Liability insurance

Accidents often happen unexpectedly, which is why liability insurance is valuable. Tenant insurance includes two types of liability insurance: personal liability insurance and health insurance. Personal liability insurance protects your financial responsibility if a guest is injured in your home or if you accidentally damage someone else’s property.

Here is an example. Say you bought a brand new washing machine and during the installation process the water hose unexpectedly burst and water seeped through the floor into the apartment below yours. If so, your tenant’s liability insurance would pay to repair the water damage and replace the affected personal effects of your neighbor downstairs.

Health insurance coverage is the other part of liability insurance. Imagine you have a friend sliding on a loose board that you wanted to fix. You end up breaking your ankle and need medical attention. In this case, your personal liability insurance will cover the cost of your injury, regardless of whether it is an ambulance ride, x-rays, surgery or rehabilitation.

The tenant’s liability insurance also protects you in legal situations. If you were sued and brought to court over a claim you made, liability insurance would cover your legal fees, court costs, and a settlement with the plaintiff.

Loss of use coverage

Loss of use insurance is the third policy that is included in tenant insurance. This coverage, sometimes referred to as additional living expenses, pays for things like lodging, restaurant bills, laundry, and parking when your home is damaged by a covered claim and you need to move out temporarily.

Loss of use coverage only applies if your home is affected by a covered loss. That means temporary accommodation is not covered if your home is being voluntarily remodeled or if there is a rodent or insect infestation.

[ Read: The Cheapest Renters Insurance Companies of 2021 ]

Loss of usage coverage can be a huge benefit if you ever need it. However, this policy does not grant you free vacation. Your downtime insurance has a coverage limit which is the maximum amount of money the insurance company will pay.

In order to reimburse the costs of accommodation and meals, you must have the costs approved by your insurer. If you book a five-star hotel in another country or spend hundreds at expensive restaurants, it likely won’t be covered. If you are using Loss of Use insurance, it is important that you keep your receipts for submission to the insurance company.

America’s Top Rated Renters Insurance

  • Rules from just now $ 5 / month
  • Log in Seconds, Claims paid in minutes
  • No hassle, no paperwork

Replacement costs for tenant insurance

Most renter insurance policies cover your personal effects at real cash value (ACV). That said, if an item is damaged or destroyed, the depreciation will be included in your payout. For example, let’s say your mattress is brand new $ 500 and is destroyed by water damage five years later. Your insurance company may give you $ 250 as a replacement because the item has depreciated over time.

[ Read: Actual Cash Value vs. Replacement Cost: What’s the Difference? ]

If you want a higher payout, some insurance companies offer you the option to upgrade your policy to the replacement cost value (RCV). With an RCV policy, your payout does not include any write-offs. That means you will receive $ 500 to replace your damaged mattress. It is important to note, however, that upgrading to an RCV will increase your premium.

We appreciate your feedback on this article. Contact us at Inquiries@thesimpledollar.com with comments or questions.

In response to the Covid-19 pandemic, many insurance companies granted relief in the form of percentages on monthly bills and a freeze on cancellations due to insolvency. While not recommended, you can technically adjust your coverage to save money when needed. Again, we strongly advise against it.

Below is how you can benefit from the recently approved Economic Relief Act:

Who can benefit from it?

To qualify for rental allowance under the CARES Act, at least one family member in the household must be unemployed or have a significant loss of income due to the pandemic. The income must be at or below 80% of the median income in your county. You must also be at risk of homelessness.

Who gets how much?

When families fall below 50% of median income, priority is given to rent relief funds. Families can receive rent for up to one year and rent relief assistance in three months in the future under the CARES Act.

How do I apply?

If you need to apply for assistance, the way you do it depends on where you live. If your city or town already has a rental assistance program in place, you will likely use it to apply for new assistance.

You can contact your local housing authority, nonprofit groups, or contact your local representatives to find out where and how to apply. Your landlord may also be able to apply for you – but they will need to get your consent and signature beforehand.


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