Homeowners are not the only ones who need insurance to protect their personal property. If you rent your home, your belongings are not covered unless you have renters insurance!
While landlords are responsible for insuring their rental properties, they are typically not liable for their tenants’ personal property. That is where renters insurance comes into play; it assures the renter’s belongings are covered in the event they are destroyed by named perils such as theft, vandalism and fire. Renters insurance may also indemnify the policyholder if the property they are renting becomes uninhabitable. Because renters insurance does not cover physical real estate, it is significantly more affordable than landlord insurance or home insurance.
What Types of Renters Insurance Are There?
Renters insurance policies typically provide three types of coverage: personal property coverage, renters liability insurance and additional living expenses. The names of these coverages may vary depending on the insurance company providing them, but the terms are essentially interchangeable.
Personal property coverage covers the policyholder if their belongings are damaged, destroyed or stolen. Clothing, furniture, appliances, sports equipment, jewelry, art, musical instruments – if you could store it in your apartment, renters insurance typically covers it.
Depending on your insurance provider, you may have an option between two different types of personal property coverage: replacement cost and actual cash value. Replacement cost coverage costs a higher premium, but it will replace stolen or damaged possessions with brand new ones. For example, if your ten-year-old guitar amp is stolen, replacement cost coverage will pay for a brand new one. Actual cash value coverage costs a lower premium, but in the same circumstance it would only reimburse you the fair market price for a ten-year-old guitar amp.
Renters liability insurance covers the policyholder in the event that they become the target of a lawsuit over an event that occurred or originated within their rental property. For example, if the policyholder’s guest breaks an ankle in their living room, or their dog bites a neighbor, renters liability insurance can pay for legal representation and damages they must pay for as the result.
Additional living expenses indemnify the policyholder in the event their rental property becomes uninhabitable. For example, if a fire destroys the policyholder’s apartment building, additional living expenses will cover their hotel accommodations and other expenses until their rental home is repaired or they find a new residence.
What Does Renters Insurance Cover and Not Cover?
The vast majority of renters insurance plans will cover possessions like furniture, cookware, clothing and other household goods. Expensive items such as electronics, jewelry and fine art are covered as well – within the policy limit. For example, if your fine art collection worth $90,000 is stolen and your policy limit is $50,000, you will lose $40,000 in net worth (and that is assuming none of your other belongings were stolen). This is why it is crucial to select a renters insurance policy with a coverage limit that equals or exceeds the combined total value of all of your property.
Your roommate’s property is not covered by your renters insurance unless you expressly added them to your policy. Doing so will raise your premium, although selecting a higher deductible can help to offset this added expense.
Personal property coverage does cover property stored within the policyholder’s vehicle. It does not cover the vehicle itself, even if it is stored on the rental property at the time of theft or damage. Likewise, renters insurance does cover bed bugs, rodents and other pest issues, as mitigating such problems is considered the landlord’s responsibility. Finally, standard renters insurance policies also do not cover earthquake and flood damage; these coverages are available under their own respective policies.
Can Landlords Require Renters Insurance?
Yes they can, and they often do. Landlords like it when their tenants have renters insurance for two primary reasons: It shields them against liability (thus lowering their own insurance premiums), and it helps them avoid potential disputes in the event that their tenants’ belongings are stolen or damaged on their property.
Some landlords only require their tenants to get renters insurance if they own dogs. Others may not require it at all. No law dictates whether or not landlords may require renters insurance or not. But just like health insurance, the peace of mind afforded by renters insurance is too great to go without regardless of your own landlord’s requirements.
Is Renters Insurance Required in South Dakota?
Just like no federal law requires renters to purchase renters insurance, so too is there no state law in South Dakota which requires the same. Likewise, the state of South Dakota does not dictate whether landlords may or may not require their tenants to secure renters insurance policies before moving into their properties.
If you are renting your home in South Dakota, then you can look forward to paying a lower premium for renters insurance. Renters insurance in South Dakota costs an average of $83 per year, whereas the national average is $159 per year.
If you would like assistance sourcing the most affordable renters insurance policy that still provides the greatest peace of mind for your unique needs, then we welcome you to contact McKinneyOlson Insurance today. Our agents are standing by to make certain you enjoy just as much protection as any homeowner would!