Renters Insurance
Things to Remember
People tend to buy auto and homeowners insurance without a second thought, because it is mandated either by law or by your mortgage company. Forms of insurance that are not required are frequently not purchased, even though the need may be at least as great as with auto and homeowners insurance.
One form of insurance that is often overlooked is Renters Insurance. The need for renters insurance is similar to that of homeowners insurance. A tenant's personal property may represent a substantial part of that persons total wealth. Many renters think that the landlords insurance will cover the their personal property - It Does Not! Landlord's Insurance protects the landlords property - the dwelling and maybe a few appliances that belong to the landlord. None of the tenant's property is covered. Renters Insurance is meant to cover the renter's personal property - furniture, clothes, TV's, stereo equipment, computers, etc. As with homeowners insurance, always ask for Replacement Cost Coverage if available.
A major consideration in renting is the tenant's potential liability for property damage to the landlord's house due to negligence, and injuries to persons visiting the tenant. Over the past 17 years, we have had a few instances of customers who rented, but did not have renters insurance, who damaged the landlord's house, and were held responsible for the costs of repair. Specific examples include a customer who was cooking something on the stove, walked out to get the mail, got involved in a conversation with a neighbor, and then noticed smoke pouring from the kitchen window. We have had this exact sequence of events happen several times over the years. In each case the landlord's insurance policy paid for the damage to the house, and then came after the tenant for the repair costs. This was because the damage was due directly to the tenant's negligence, and amounts ranged from $7,000 to $90,000. In most of these examples, the tenant did not have renters insurance, and was personally responsible for reimbursing the insurance company for the amount of the payout. If those tenants had had renters insurance, in most cases liability coverage would have been included for up to $100,000 as part of the policy, and those damages would have been paid by their renters insurance policy. We have also had a few cases where a tenant's dog bit a visitor, and the visitor sued the tenant and the landlord. The landlords insurance paid their portion of damages, but the tenant was responsible for the rest.
Bottom Line
If you are a tenant - buy renters insurance to protect yourself and your landlord. If you are a landlord - Do not rent to anyone unless they have adequate renters insurance, and list you as an additional insured.