Renting for the First Time? Here's What You Should Know About Renters Insurance

Anyone renting an apartment should read this to make sure they get the right coverage.

People who are renting a home for the first time need to make sure they purchase renters insurance. Landlords sometimes require tenants to purchase this kind of insurance, but even in circumstances where buying coverage is not mandated, it's important to get this protection in place.

Unfortunately, first-time tenants often don't understand exactly what renters insurance does, why it is so important to buy it, or what protection they should look for when getting insurance. Not knowing about these issues could lead to costly errors, so here are three key things about renters insurance that anyone who is renting for the first time needs to know. 

1. Renters insurance protects a tenant's possessions

Tenants need to be aware that renters insurance can provide coverage for their possessions if things go wrong. 

Typically, most people have many valuable items in their rented home or apartment. This can include furniture, clothing, and electronics. In fact, renters usually have virtually everything they own in their properties.

If a fire or other covered disaster happens, the renter's possessions could be damaged or destroyed. People typically cannot afford to pay out-of-pocket to replace all of the items they own. To make sure they don't have to, they should consider buying renters insurance. 

Specifically, anyone who is renting a property should consider purchasing insurance that provides replacement value coverage for their possessions. This is an alternative to market value coverage. 

Buying a policy that covers replacement value ensures the renter is provided with enough money to replace things they own that were destroyed, rather than just the current market value of those items (which may not be that high for older possessions). 

2. Renters insurance can also provide protection against liability

Renters should also make sure they consider buying insurance that offers liability protection as well as protection for their personal property. 

Liability insurance will pay to cover injuries and damages sustained by visitors to a rental property. For example, if someone is injured inside of a tenant's home, or is bitten by a tenant's dog and gets hurt, liability insurance protection would pay for medical treatment, lost wages, and other damages the victim experienced such as pain and suffering.

Without liability protection, a tenant could be forced to cover costs out-of-pocket if they are held responsible for someone else's injuries on their property.

3. A landlord's policy doesn't provide sufficient protection 

Some renters assume a landlord will have insurance that will offer the coverage they need if things go wrong. This is likely not the case.

A landlord's insurance can cover the structure of the building and injuries that occur in common areas. But the landlord's policy doesn't typically cover a tenant's possessions and may not cover injuries that occur within a tenant's unit, depending on the cause of the accident.

Tenants cannot assume they are protected unless they buy their own renters insurance coverage. As a result, purchasing this insurance should be done ASAP upon renting and the coverage should be in place upon move-in. Otherwise, tenants take a huge risk and could find themselves facing huge financial losses that are difficult or impossible to recover from.