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When to take out renter’s insurance?

When to take out renter’s insurance?

Home sharing is a great way to earn a little extra cash and, as long as a renter abides by the rules of their policy, renters insurance offers a layer of protection in case something happens to their guests or their belongings. Also known as renters insurance or HO-4 policy, renters insurance is similar to homeowners insurance in that it covers many of the same situations, such as fire and theft, but is much cheaper because it only includes what’s inside your home and not the structure itself. Before taking out renters insurance, take stock of your belongings to decide how much personal property coverage you need. Wealthy renters can afford to pay out-of-pocket for liability claims and minor property damage, but in extreme cases, renters may not be insured for the costs of extensive damage to their personal belongings.

So if your bike is stolen outside a shop or your phone is stolen by a pickpocket while you are travelling abroad, your renters’ insurance policy will cover you with some caveats. Just as your renter’s policy covers your belongings when you are travelling, it usually also covers them when they are stored somewhere other than your home. For most renters, renters insurance is an invaluable tool to protect them from potentially devastating financial consequences. The liability portion of your renters insurance policy covers you in these cases, paying for bodily injury or damage to someone else’s property.

Earthquakes are another disaster that is not covered by most renters insurance policies. In the event that their flat or home is deemed uninhabitable due to a covered event, smoke damage, for example, they would be stuck paying out-of-pocket for any expenses that exceed their typical spending levels if they did not have renters insurance. Too many renters think they don’t need liability protection because they rarely have guests or believe the likelihood of someone being injured in their home is almost non-existent. A standard renters policy covers your personal belongings, pays your expenses if you need to relocate temporarily during covered repairs, and includes liability insurance in case you are sued for negligence.

When deciding how much renters insurance is enough, the main decision you will make will be to establish the limits of your personal property coverage and your liability coverage. There are a number of misconceptions about renters insurance that may cause renters not to purchase a policy. If your home becomes uninhabitable due to circumstances covered by your policy, renters insurance coverage generally pays for additional living expenses while your home is being repaired. While homeowners, earthquake and flood insurance can be expensive, renters insurance is comparatively inexpensive.