More people rent than any time before, and it’s been slowly creeping up. According to the U.S. Census, in 2014 we’re now at 37% of rented households, and in certain large cities and states this can over 50% (in California 53% are renters). A 2015 survey by the Insurance Information Institute found that while 95% of homeowners had Homeowners Insurance, only 40% of renters and Renters Insurance. One of the reasons is the uncertainly of what if covers and when it comes into play verses other parties’ insurances providing the payout. A recent story highlights what happened when renters didn’t have the insurance and answers the question “when does renters insurance pay?”
An Example of a Renters Insurance Situation
In Bellevue, Washington, the Contreras family had already been under financial strain after medical bills from a successful liver transplant when the neighbor’s garage fire caused damaged to their home. While the fire didn’t consume the home, smoke and water did significant damage to the home and the possessions within. While the Contreras family had had renters’ insurance in the past, they had let it lapse due while covering the medical bills.
Renters Insurance Covers Possessions and Lodging
Renters insurance provides several benefits, two of which help during the above example: personal property coverage and additional living expenses. The most important part of renters insurance is protecting your possessions: the landlord’s insurance doesn’t cover your possessions, just the structure and their property (like the fridge and washing machine) that came with the rental. For the Contreras, many of their possessions were damaged, including new electronics and furniture.
Additional Living Expenses
Another thing people rarely think about is that if the property is damaged, where will they stay while it’s being repaired? Renters insurance also usually has “Additional Living Expenses” coverage which help with costs when you’re unable to stay in the rental. This helps cover hotel bills and even dining expenses if you’re forced to pay more for food than normal (such as having to eat out due to a lack of kitchen). The Contreras had hoped the neighbor’s insurance would take care of lodging expenses, but there was no such coverage.
When Others’ Insurance Covers Your Damages
The Contreras biggest blow was the hope that the neighbor’s homeowners insurance would pay for their losses. While this insurance does pay out to the policy holder to repair their home, it only pays out to other parties when the damage caused comes from negligence. When fire investigators found not signs to that effect, the Contreras were on their own.
When Renters Insurance Pays
Your renters insurance is tied to your rented home, providing protection to the things and people within it, just like homeowners insurance. Most renter’s policies cover:
- Personal Property: Most possessions at either full retail or current market prices.
- Liability: Helps cover guest injury in your house, or property damage to neighbors.
- Additional Living Expenses: If you are unable to live in the home you are renting, this can help pay with the additional costs (hotel, food, etc.).
Want to learn more about why renters insurance is a must-have for any rented home? Contact the TJ Woods Insurance Agency. We’ll help you figure out how much coverage you’d need: you might be surprised how quickly it can add up—the average renting family has over $35,000 in possessions. We’ll help you pick the coverage right for you, and since it doesn’t involve the home itself it’s much cheaper than homeowners’ insurance!
