March 15, 2020
Agency
How Does Renters Insurance Work?
More and more landlords are requiring their tenants to carry renters insurance. While you may know that you need renters insurance, some tenants are confused on what renters insurance covers and why they need it.Renters Insurance.
Renters insurance covers three areas:
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Liability: Liability insurance is what most landlords will require you to carry. It ensures compensation if you cause bodily injury or property damage to someone else. A landlord will usually require you to carry at least $100,000 in liability coverage before move in. This liability insurance can also extend to pets.
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Personal Possessions: Personal possessions coverage isn’t typically required, but it’s just as important. This coverage provides compensation if your personal belongings are lost or damaged due to fire, smoke, lightning, theft, vandalism and more.
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Additional Living Expenses: If a disaster makes the rented space temporarily unlivable, additional living expenses will help with the cost of staying somewhere else while repairs are being made.
Keep in mind that you can receive a warning or even be evicted for not carrying renters insurance.
If you already have car insurance, you can usually purchase renters insurance through the same insurance company. Purchasing renters insurance, just like with car insurance, means you are paying monthly premiums for a certain amount of coverage. Thankfully, renters insurance is a lot cheaper than car insurance.
Actual Cash Value vs Replacement Cost Value
There are two ways you can receive compensation for your items after an insurance claim: actual cash value or replacement cost value. Actual cash value (ACV) considers the value of the item originally and then subtracts depreciation. For example, if your television was worth $1,000 when you bought it four years ago and is now only valued at $500, you will only receive $500. This typically isn’t enough to replace the original item, but this coverage is cheaper than replacement cost value. The replacement cost value (RCV) of an item is the cost it would take to replace the item of similar or identical make and value, without counting depreciation. You are more likely to be able to replace your items with this coverage, but it may mean higher monthly premiums.
How Much Does Renters Insurance Cost?
Renters insurance is relatively cheap. The price varies depending on your location, ACV or RCV, and the policy’s limits. In Oklahoma, renters pay an average of $15 a month for renters insurance.