If you are renting an apartment or house, or you are considering renting either of the two, then there is a good chance that you’ve heard about renters insurance. There are a wide variety of misconceptions regarding renters insurance, and unfortunately it is such misconceptions that lead many tenants to mistakenly forego renters insurance coverage. There are five myths or misconceptions that are generally the most rampant, and it is important that tenants recognize them so as to know exactly why they need renters insurance.
1. The landlord’s homeowners insurance will cover the property of tenants
Unfortunately, a majority of tenants make the incorrect assumption that their landlord’s insurance will keep them covered from any damage or theft. As such, tenants often decide against renters insurance, and even if they have renters insurance, they often fail to submit a claim in the case of damage to their property. The real truth is that a landlord’s homeowners insurance will only cover the rental property itself, and not the belongings that are inside the property. Only renters insurance will cover your personal possessions.
2. Renters insurance is needed to cover any damage that my possessions inflict upon the apartment.
Often times, a landlord will put a clause in the lease that states that renters insurance is necessary in case of damage caused to the property from a waterbed or fish tank. Although renters insurance is highly recommended, it is certainly not for this type of situation. While the clause in the lease looks as if it would hold up in court, the truth is that any damage done to the house or property is covered by the landlord’s homeowners insurance policy. Any damage to personal possessions within the house would be covered by the renters insurance.
3. Renters insurance covers the actual cost of each item
The truth is that renters insurance will not pay you exactly what you paid for your personal items listed on the claim. Instead, it reimburses through two different means, which include actual cash value, and replacement cost. Actual cash value is what is typically included for basic renters insurance policies. It provides reimbursement for the diminished value of an item. For example, if you bought a television for four thousand dollars three or four years ago, you would not receive four thousand dollars in reimbursement, but rather the determined value of what that television is worth in today’s market. Replacement cost coverage is what many think of when they talk about renters insurance. It is an option that will reimburse you for the actual cost that you paid for the claimed item. However, replacement cost coverage is usually an upgrade that you need to request.
4. Renters insurance covers damage from all natural disasters
This myth about renters insurance is one shared by typical homeowners insurance policies. Renters insurance policies will typically not cover damage from flooding or earthquakes. If you need flooding or earthquake coverage, you will likely need to take out a separate policy.
5. One doesn’t need to file a renters insurance claim if somebody gets hurt on the property
Many tenants hold the mistaken belief that if a friend comes over and gets hurt on the rental property, it will be the landlord’s responsibility to file a homeowners claim. However, the reality is that if you were the one to invite the person to your rented residence, and they got hurt while there, it is you and your renters insurance that will be held liable. Fortunately, medical costs are often included in most renters insurance policies.