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One of the joys of renting is that if something goes wrong with your apartment, from a leaky pipe to a broken boiler, it probably isn’t your responsibility. Instead, your landlord is on the hook for most repairs.

So you might figure that if anything goes seriously wrong—someone breaks in and steals your valuables, or a guest slips on the floor and breaks a leg—it would probably also fall to your landlord to cover it.

But chances are your landlord’s insurance policy only covers them, not you. And that can cost you, especially if you’re like the majority of renters and don’t have renters insurance.

Fortunately, it’s actually one of the more affordable insurance policies, costing just about one meal out a month and covering hundreds of thousands of Rands for damage and liability.

What is renters insurance?

Renters insurance is a type of insurance that provides financial coverage for damage to your apartment, injuries occurring at your apartment and theft of (or damage to) your possessions.

How does renters insurance work?

Like most forms of insurance, renters insurance offers financial protection in exchange for a monthly payment called a premium. As long as you pay your premium, your renters insurance should cover any financial misfortunes you, your guests or your possessions experience at—or sometimes even outside of—your home.

Should your home, possessions or guest be harmed, your insurer will ask you to file a claim. Then it generally covers the expenses you incur with an excess payment due. Your policy may have specific per-event, annual or lifetime maximums for coverage, so be sure to read carefully before signing.

What does renters insurance cover?

Renters insurance protects everything from your electronics to your clothing and furniture. That means if they get damaged in a fire or get stolen from your home, your insurance policy will pay out either their current or replacement value, depending on your policy. It may even cover your possessions when they’re damaged or stolen outside of the home, like if your iPhone gets swiped from your bag. In those cases occurring outside of your home, your insurance may only cover a percentage of its normal max.

Renters insurance insures more than just the value of the things you have in your apartment, though. One of the hidden gems of renters insurance is that it grants you personal liability protection.

What is personal liability protection?

Your renters personal liability insurance covers you financially if someone gets injured in your home. These types of injuries can set you back a lot financially because not only do you generally have to pay for medical care but also any lost wages.

As with possession coverage, renters insurance liability coverage may also cover you away from the home. So if your dog bites someone at the park, your renters insurance may help pay the cost of any medical bills.

How much renters insurance is the right amount?

To calculate the amount of renters insurance one may need, take a quick survey of the things you own and add up their approximate values.

Big-ticket items include electronics, jewelry and appliances. You’ll want enough coverage to account for at least all of your possessions that would be expensive to replace. Personal liability coverage is separate from coverage for your possessions. 

Anything else?

Insurers may allow you to purchase coverage for the actual cash value or the replacement value of your things. Actual cash value reflects the current worth of something, accounting for depreciation from age or use. Replacement value is how much it would cost you to buy a new version of what’s been damaged or stolen. If given a choice, select the type of value coverage that works better for you.

Your renters insurance policy probably also includes coverage for additional living expenses (ALE). This comes into effect should your home become uninhabitable and you need to pay for temporary lodging and food elsewhere.

This article has been distributed for educational purposes only and should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. Information contained herein has been obtained from sources believed to be reliable, but not guaranteed.

Insurance

What is renters insurance and do I need it if I rent?

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