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The Importance of Renters Insurance

Juan Martinez • April 21, 2021

renters insurance contract with house key

The average renter's insurance policy costs $179 per year, or $14.90 per month, according to data from the Insurance Information Institute. Nevertheless, the amount you may be required to pay may vary depending on different factors. Based on the average cost, we can all agree that the price of renter's insurance is rather miniscule.

Here's the shocker: Despite renter's insurance costing less than a delivered pizza per month, less than half of the total renting population has taken out this important insurance. According to the Insurance Information Institute, only 40 percent of renters have renters insurance. In other words, 60 percent of renters (about 44 million people) are risking their worldly possessions and livelihoods, gambling with their future.

If you're one of those who don't have renter's insurance, the crucial question that you should ask yourself is – could you afford to start over again if everything you had was gone tomorrow? Here are more reasons why you should take out renter's insurance sooner rather than later:

1. It Covers Losses to Personal Possessions

When asked why they don't have renter's insurance, most uncovered renters say that they think that they are covered by their landlords. They couldn't be more wrong. In the event of a catastrophe that causes extensive damage, landlord's insurance only protects the physical building and any of the landlord's possessions.

To ensure that your personal possessions will be protected in the event of a calamity, you should take out renter's insurance. This type of insurance offers protection against losses to tenants' personal possessions, including clothes, electronics, furniture, and home appliances.

So, what perils does renter's insurance policy protect against? A standard HO-4 insurance policy protects against a surprisingly long list of perils, including:

Theft, vandalism, or malicious mischief,
Riot or civilian commotion,
Smoke, fire, or explosion,
Damage caused by vehicles,
Damage by aircraft or falling objects,
Hail or windstorm,
Weight of snow, ice, or sleet,
Damage from water or steam, etc.

Note that renter's insurance does not cover everything. For instance, losses resulting from natural calamities like earthquakes, floods, volcanic eruptions, and lightning are not usually covered in standard renter's insurance policies. If you live in a hurricane-prone area, you should consider taking out a separate flood insurance policy.

Most renter's insurance policies also do not cover expensive items, like jewelry, art, collectibles, precious stones, watches, etc. If you have any valuable items that aren't covered in the standard renter's insurance policy, you should consider adding a scheduled property rider for anything that's not covered by your policy.

Just like many other insurance policies, renter's insurance policies do not cover losses resulting from negligence or intentional acts. For instance, if you fall asleep with a lit cigarette and cause a fire, your renter's insurance policy most likely won't cover the damage.

2. It Covers Personal Possessions in Transit

Most renter's insurance policies provide coverage for tenant's personal possessions not just when they are at their residences, but when in transit between apartments. It's a good idea to consult your insurance agent about your current renter's insurance policy to ensure that your coverage is adequate for your move.

While most renter's insurance policies offer coverage for personal items in transit, they do not usually pay for any damage that occurs due to mishandling by the movers when physically moving or packing the items. Depending on your agreement, your professional mover may provide some protections for your personal items during transit.

Note that your rate might adjust depending on the location of your new residence and the nature of the risk factors surrounding it. If you're moving in-state, be sure to update your address. As long as your premiums are up-to-date, your renter's insurance policy will remain in effect. If you're moving out-of-state, you may need to get a new renter's insurance policy in keeping with its regulation.

3. It Provides Liability Coverage

If someone slips and falls or gets injured in your house – a neighbor, a guest, or the pizza delivery guy – he/she is within his/her right to sue you. The last thing you want is such an incident to occur when your finances are not in order.

Another reason why renter's insurance is important is because it offers liability protection that covers tenants for such incidents. Note that the amount of protection depends on the terms of the individual renter's insurance policy.

4. It Covers Additional Living Expenses

Imagine that a hurricane renders your home uninhabitable, necessitating you and your family to move out to another house for several months until your home has been repaired. If you have taken out renter's insurance, you may not have to worry about the additional living expenses that you may incur.

Additional living expense insurance refers to coverage under renter's insurance, homeowners, or condominium owner's insurance policy that covers the additional living costs incurred by a policy holder after being displaced from their place of residence. This coverage normally amounts to about 10-20% of the insurance that covers the dwelling. It may cover the following costs:

Moving or displacement costs
Hotel stays and restaurant meals
Furniture rental
Storage costs
Laundry costs
Pet boarding

Be sure to check with your renter's insurance policy to determine how long it will cover additional living expenses.

Should Landlords Require Tenants to Have Renter's Insurance?

The answer is yes. Many landlords require their tenants to take out renter's insurance to prevent potential disputes if the tenant's belongings are damaged or guests are injured while on the property.

If you're a landlord, there are certainly advantages to requiring renters insurance. While renter's insurance may help minimize your renter's risk, you also want to find tenants that will respect your property and pay their rent on time. The best way to minimize your risk is to screen prospective tenants thoroughly before they move into your property.

Enjoy Streamlined, Efficient Property Management

Many landlords are extremely busy and don't usually have time to run background checks on potential tenants. If you own rental property in the Las Vegas, Henderson and North Las Vegas areas of Clark County Nevada, you can rely on Century 21 Americana.

Aside from conducting thorough applicant screening and background checks, we also offer other services, including property advertising, rent collection, personal and professional tenant relations, Owner and HOA services, and real estate services.

Contact C21 Americana today if you're interested in renting your property and don't want to worry about finding and managing high-quality tenants.

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What Does a Property Management Company Actually Do? Behind the Scenes Look

November 26, 2024

A lot of people think property managers just sit back, relax, wait for the phone to ring, collect rent, and that's it. My name is Jorge Rodriguez, president of Americana Property Management in Las Vegas, and I want to show you what really goes on behind the scenes in property management. Should You Hire a Property Manager? Whether you own one property or twenty, there comes a point when managing everything yourself becomes overwhelming. At Americana Property Management, we typically help owners who: Own multiple rental properties and can't keep up with all the demands Live far from their Las Vegas investments Want their rental income to be truly passive Don't want to deal with hiring maintenance staff and contractors Can afford to invest 8-12% of their rental income into professional management The cost of property management isn't just an expense - it's an investment in protecting your property and maximizing its value. Let me show you exactly what I mean. 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Through our online portal, you can: See real-time updates on rent collection Review maintenance requests and approvals Access monthly financial statements Track property performance View all property-related documents Every month, you'll know exactly: How much rent was collected What maintenance was performed Any upcoming expenses or needs Your property's bottom line We take care of your property like it's our own, and we make sure you always know what's happening with your investment. The Lease Renewal Process We start the renewal process 90 days before the lease expires. During this time we: Compare similar properties to see if a rent increase (usually 3-5%) is justified Inspect the property to ensure it's being properly maintained Review the tenant's payment history We take all these factors into consideration before offering a renewal, and we always get your blessing before moving forward. Most of our initial leases are for one year. This gives us flexibility - if a tenant isn't paying on time or taking care of the home, we can give them a 30-day notice to vacate instead of renewing. However, when we do find good tenants, they tend to stay in our properties between 3 to 5 years. We really try to find long-term tenants so you can make consistent income from your investment. Looking for Property Management? Our main focus is making sure your interests are taken care of. You collect a nice check every month, and we handle all the headaches. If you have any questions about how we can help manage your property, you can reach us at 702-719-2100 or email us at pm@americanapm.com.