‘Do I need renters insurance?’ is one of the questions you may be asking yourself if you’re renting. Whether you’re renting your first apartment or you’ve been in the same place for a while, are moving and wondering whether the requirements around renting have changed since.
With more and more people renting, renter’s insurance is becoming increasingly common – but is it a requirement, and should you be getting one? We’ve asked real estate professionals to give their expert views on the subject.
Do I need renter’s insurance?
Tomas Satas is the Founder, and CEO at Windy City HomeBuyer (opens in new tab). As a real estate investor, landlord and professional house flipper, Satas has a clear view on renter’s insurance: while it’s not a legal requirement, you should take it out. In fact, ‘landlords often require it as part of the lease agreement.’
In practice, whether landlords require renters insurance or not varies a lot from area to area. Satas personally does require renters insurance from his tenants, although he comments that ‘ thankfully, none of my tenants have had to use theirs while renting from me.’
On the other hand, Houston-based real estate expert and owner of House Cashin (opens in new tab) Marina Vaamonde, tells us that in her experience, most landlords don’t require renters insurance.
To sum up: whether or not you need renters insurance will vary from landlord to landlord. In some areas, it’s more common practice than in others, but you should be prepared that your new landlord may request that you get it as a condition of the lease.
What are the benefits of renter’s insurance and is it worth it?
In a word: yes, it is worth it. Renter’s insurance most commonly protects the renter against natural disaster, fire, or theft. Vaamonde adds that ‘renters insurance protects you from paying certain expenses if you are found legally responsible for injuries to other people or for damaging their property.’ She adds that ‘generally’, she finds renters insurance to be worth it.
Liability coverage isn’t automatic on all renters insurance policies, but it can be added as a separate clause if it’s not included.
Renters insurance is not expensive - ‘usually only $10-$20 per month’. But ‘the legal protection that you get from that gives you the peace of mind to live your life without worries. Moreover, landlords prefer tenants that have such insurance because it lowers their liability as well.’
Satas agrees that renters insurance is definitely worth and gives you good value for money in the long run: ‘the cost is minimal, especially when packaged with other lines of insurance from your provider, and provides everyone with peace of mind.’
Boyd Rudy (opens in new tab), of Dwellings Michigan, adds that renters insurance ‘can save you a lot of money in the long run if something happens to your belongings.’
Many renters underestimate the cost of replacing their belongings in case of theft or damage. The costs can quickly run into many thousands – and if you’ve lost a large proportion of your belongings, you’ll have to come up with a lot of funds all at once, which can be difficult.
Considering how little renter insurance costs per month, it’s well worth taking it out regardless of whether your landlord requires it.
What does renters insurance not cover?
As with all types of home insurance, there are exclusions to be aware of. The most significant exception is flood damage. Most policies will not cover damage to your belongings by flood water, although some may cover water damage from a burst pipe inside the home. Renters living in areas at risk of flooding should consider taking out separate renter flooding insurance from FEMA (Fedral Emergency Management Agency). With some policies, you can also add extra flood coverage onto your renters insurance policy, but you’ll need to check with your provider.
The same restrictions apply to earthquake damage. Generally speaking, anyone who lives in an area prone to severe damage from these types of natural phenomena needs to consider additional cover. You will be covered against wind, hail, and rain damage, however.
Another important exception is bed bug damage, which isn’t covered by renters insurance. Generally, household pests and any damage they may cause are not covered.
Finally, renters need to know that the definition of ‘damage’ does not include any normal wear and tear. Renters insurance can’t be used to cover end-of-tenancy repairs or cleaning.
Do I need renters insurance in the UK?
Renters insurance is completely optional in the UK, with no obligation to take one out. It is uncommon for UK landlords to ask for renters insurance to be taken out, but anyone renting in the UK should be aware that most rented properties are only covered by buildings insurance that covers structural damage to the property in case of a natural disaster/fire, and any contents insurance the landlord may have will cover only things they own.
It’s completely up to you whether you want to take out renters insurance to protect your belonging while renting.