5 Myths of Renters Insurance
Renters insurance is a critical component of any rental property, but some don't think so. Here are five common myths of renters insurance:
Myth #1: I'm renting a property and have a responsible landlord, so he will take care of me if there's an accident in my living space.
Truth: Your landlord is not responsible for your damaged personal property and often only has to insure the structure of the building. In many instances, a landlord will ask that a tenant obtain renters insurance to avoid a gap in protection. Your possessions and valuables — everything from clothing to electronics — can be protected against theft, fire, vandalism, lightning, and other catastrophes outlined in your renters insurance policy.
Myth #2: If I opt for an Actual Cash Value renters insurance policy, it will pay for the exact items that need replacement.
Truth: Actual Cash Value will pay to replace your possessions but will deduct a depreciation amount, adjusted based on the age and condition of your belongings. Replacement Cost, on the other hand, will pay the full cost of replacing your possessions without deducting depreciation costs, up to the limit of your policy. Think critically about which is more cost-effective for you, as the latter option can cost about 10% more.
Myth #3: If my dog bites someone who is visiting my rental property, their insurance will cover it and I'm not responsible.
Truth: Renters insurance offers protection against liability. In the event that you, a family member, or even a pet causes injury to someone else on your property, the liability portion of the policy may pay for emergency medical expenses, legal costs, and possibly court awards, up to the limit of your policy.
Myth #4: If my rental property needs repairs due to damage and I'm temporarily unable to live there, I don't have to pay for my expenses while I'm displaced.
Truth: Additional living expense coverage is yet another perk of renters insurance and will often cover the difference between your regular living expenses and the additional costs of living away from home, such as hotel bills and restaurant meals. In the event of damage that leaves you homeless with no definite time frame, this accommodation is extremely beneficial.
Myth #5: I can get a cheap renters insurance policy and it will cover all of my things.
Truth: The amount of insurance to purchase often depends on the value of your possessions. It might be helpful to calculate the estimated value, which can be done through websites such as WFI.
Helpful tip: Take photographs of your belongings and keep them in a safe place outside your home. If something were to happen, like a fire or a robbery, you would have visual proof of the items that need replacement. You never know what sort of disaster or catastrophe could strike. If it does, renters insurance will ease your nerves and make the process less burdensome.