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What is Renters Insurance and What Does it Cover?

Renters’ insurance is specifically designed to protect the personal belongings of tenants due to damage or loss from fire, theft, vandalism, and other covered perils in your policy.

It also provides liability coverage if you’re responsible for someone else’s injuries or damage that has occurred within your rented property. Plus, it provides the temporary living expenses if your rented property is uninhabitable after a covered loss.

Typically, renters' insurance includes three key types of protection, which include personal property, liability, and additional living expenses to safeguard renters living in a house or apartment.

In this guide, you’ll learn how renters insurance works, what it covers (and doesn’t cover), optional add-ons for extra protection, who needs it and who pays for it, and how to get renters insurance in Michigan.

How Does Renters Insurance Work?

If you’re exploring renters’ insurance to protect your personal belongings, cover liability costs, and secure temporary living expenses after a covered loss, it’s important to understand how your policy works. Here’s a breakdown of how renters insurance keeps you financially protected.

Pay Premiums to Purchase the Renters’ Insurance Policy

First, you need to purchase a renters’ insurance policy. For instance, if you’re located in Michigan, it is essential to find a reliable insurance agency in Michigan offering a cheap renters’ insurnace policy with the required coverage options.

Once you’ve determined your desired coverage, finalize it with your insurer to get the paperwork done, and pay your premiums to confirm the purchase. Your renters’ insurance policy should be activated immediately, or within a few hours on the same day.

File a Claim When the Covered Event Happens

If your belongings are damaged, stolen, or destroyed, you can file a renters’ insurance claim. Your insurer may ask for details about the incident and any supporting evidence, like photos or videos. In some cases, an adjuster might visit to verify the claim. Once everything is reviewed and approved, your insurer will cover the eligible expenses.

Pay Your Deductibles to Get Covered

Before your renters’ insurance policy pays out, you will have to pay your deductibles out of pocket. For example, an accident in your rented apartment damages your laptop and furniture. Now, you will have to spend $1,000 to repair them, but you have a deductible amount of $500 in your policy.

In this case, you will first have to pay $500 for the damages, and then your insurer will cover the remaining $500 from your renters’ insurance policy. Keep in mind, you won’t get covered by your insurer until you pay your deductibles after each claim.

Your Insurer Pays You

After reviewing your claim, your insurer will pay for your loss based on your policy terms. Generally, the review process can take a few days to several weeks, although some state regulations require a decision in 40 days with all the necessary documents.
The renters’ insurance payout is covered based on the actual cash value (minus depreciation) of your personal belongings. If you have replacement cost coverage, your insurer will pay the brand-new price to replace the damaged or stolen belonging.

Read About: Does Renter’s Insurance Cover Car Theft?

Your Personal Belongings are Covered Everywhere

One of the biggest advantages of renters’ insurance is that it can cover your personal belongings even when they’re outside your rented home. However, this off-premises coverage is usually limited to up to 10% of your total coverage. For example, if your laptop is stolen or damaged while you’re away from home, your policy would cover up to 10% of your coverage limit.

Types of Renters Insurance Coverage

There are mainly four types of renters’ insurance coverage to protect your personal belongings, cover liability claims against you, provide living expenses if your rented property is no longer inhabitable, and pay medical expenses if a visitor gets injured.

Personal Property Coverage

This coverage helps protect your personal belongings financially if they're stolen, vandalized, or damaged due to peril. It typically includes most of your items, such as:

Clothes

Furnitures
Electronics (computer, laptop, TV etc.)
Decorations (wall frames, clocks, flower vases, etc.)
Tools, equipment, and kitchen accessories
Appliances (refrigerators, washing machines, dishwashers, etc.)

Liability Coverage

If you’re responsible for an accident in your rented premises leading to injuries or damage to their personal belongings, the liability coverage will pay their medical fees and cover the repair/replacement costs of their belongings up to your coverage limits.

For example, you could be liable if a guest slips on a wet floor, or if your pet injures someone or damages their belongings. In these cases, your renters’ insurance helps cover the costs associated with the accident.

Additional Living Expenses (ALE) or Loss of Use Coverage

If your rented home becomes uninhabitable due to accidental perils like a fire outbreak, water pipe leakage, short-circuit, pest infestation, or a severe storm, the additional living expense, or loss of use coverage will pay the living costs for temporary housing. This can include staying in a hotel, rental apartment, or with friends or family until your home is repaired and safe to live in.

Medical Payments to Others

If a visitor is injured on your rented property, this coverage will pay for their medical expenses, hospital bills, or funeral costs, regardless of fault. It provides a financial safety net for minor accidents that occur on your property.

What Does Renters Insurance Cover?

The standard renters insurance covers a range of incidents based on its coverage type. The table below shows the extent of financial protection you can get from the four types of renters’ insurance coverage.

Type of Coverage	What It Covers	Incidents Covered
Personal Property Coverage	Covers your personal belongings if they are damaged, destroyed, or stolen due to covered perils.	Fire or smoke damage, theft or burglary, vandalism, windstorm or hail, water damage from burst pipes, lightning, explosion, falling objects (e.g., tree branch), weight of ice, snow, or sleet, or electrical short circuit
Liability Coverage	Pays for legal and medical expenses if you accidentally cause injury to others or damage their property.	Guest injury on your property, accidental damage to a neighbor’s property, bodily injury claims, legal defense costs
Additional Living Expenses (ALE) / Loss of Use Coverage	Covers the extra costs of living elsewhere if your rented home becomes uninhabitable after a covered loss.	Fire damage, water damage, windstorm/hail damage, smoke damage, pest infestation, vandalism, explosion, falling object/tree damage, and other sudden covered perils
Medical Payments to Others	Pays for medical expenses (and funeral costs, if needed) when a visitor is injured on your property, regardless of fault.	Guest slips or falls, minor injuries, hospitalization due to accidents on your property, funeral

What Does Renters Insurance Not Cover?

Standard renters insurance does not cover certain accidents or perils. The table below outlines the types of losses typically excluded from a standard policy.

Type of Damage or Situation	What’s Not Covered	Examples
Flood Damage	Renters insurance does not cover damages caused by natural floods or surface water.	Damage to furniture and electronics from rising river water or heavy rainfall flooding your apartment.
Earthquake Damage	Standard renters insurance excludes losses caused by earthquakes or ground movement.	Cracked walls, broken valuables, or structural damage after an earthquake.
Pest Infestations	Losses caused by rodents, termites, or other pests are not covered.	Damage to wooden furniture or wiring due to termites or mice infestation.
Intentional Damage	Any damage you cause intentionally or through neglect is not covered.	Breaking your own window or damaging property on purpose.
High-Value Items Beyond Policy Limits	Standard policies have coverage limits for jewelry, artwork, or collectibles.	Stolen engagement ring or lost antique worth more than your policy limit.
Business-Related Losses	Renters insurance doesn’t cover items or liabilities related to a home-based business.	Damage to office equipment or customer injury in your home office.

Additional Renters’ Insurance Coverage to Consider

Since standard renters insurance doesn’t cover certain incidents or perils, you should consider these five optional renters insurance coverages for enhanced protection.

Flood Insurance Coverage

Standard renters insurance typically does not cover damage caused by flooding. Flood insurance coverage provides financial protection for your belongings if water from overflowing rivers, heavy rain, or other flood-related events damages your personal property.

If you want to purchase flood insurance, ask your insurer whether they provide this coverage; if not, you can explore government programs like the National Flood Insurance Program (NFIP).

Earthquake Insurance Coverage

Losses caused by earthquakes are excluded from most standard renters policies. Earthquake insurance covers damage to your personal belongings resulting from seismic activity, helping you replace or repair items affected by an earthquake.

Replacement Cost Coverage

Standard policies often pay the actual cash value (ACV) of damaged items, which accounts for depreciation. Replacement cost coverage reimburses you for the full cost to replace your belongings with new items of similar kind and quality, ensuring you can fully restore your property.

Valuable Items Coverage

Most standard renters insurance policies have limits on high-value items such as jewelry, artwork, or collectibles. Valuable items coverage provides additional protection for these items, so you can recover their full value if they are stolen or damaged.

Sewer or Drain Backup Coverage

Damage caused by sewer or drain backups is generally not included in a standard renters policy. This optional coverage helps cover the cost to repair damage to your personal property caused by overflowing sewers, drains, or sump pump failures.

Who Needs Renters Insurance and Who Pays for It?

It's the tenant that requires renters' insurance, and as the tenant is the policyholder for renters insurance, the tenant will have to pay for it. In other words, renters insurance is also called tenant insurance.

The landlord is only required to acquire homeowners’ insurance to protect the building and its structure. So, as a tenant, if you want to protect your personal belongings, cover liability costs, and temporary housing while your rented home is uninhabitable, you should purchase a renters insurance policy.

In many cases, landlords require proof of renters insurance. In fact, recent statistics show that 75% of landlords require it to avoid complications with tenants. This means renters insurance is not only a financial safeguard but often a rental requirement.

Final Remarks: Is Renters Insurance Essential?

Yes, renters insurance is essential as most landlords often mandate it as a rental requirement. More importantly, renters’ insurance provides financial protection for your personal belongings and helps you secure expenses for temporary housing, if your home is uninhabitable after a covered loss.

If you’re interested in purchasing a renters insurance policy in Michigan, you can contact us to get a free quote and expert advice from a PLPD agent. For residents in Flint, Saginaw, or Mt. Pleasant, you can also visit our office for a face-to-face consultation.

Frequently Asked Questions (FAQ)

What is the purpose of renters insurance?

The purpose of getting renters insurance is to ensure adequate financial protection in the event of theft, vandalism, or accidental damage due to fire, water damage, short circuit, and other covered perils.

Do we all need renters insurance?

Renters insurance is not legally required, but 75% of landlords require tenants to have renters insurance, which does make it a rental requirement. Plus, everyone should get renters’ insurance, especially to ensure that their personal belongings are protected against covered perils.

Does renters insurance cover natural disasters?

Standard renters insurance typically covers perils like fire, theft, or wind damage, but it does not cover floods or earthquakes. Optional add-ons, such as flood or earthquake insurance, are available for enhanced protection.

How much does renters insurance cost?

The cost of renters insurance varies based on location, coverage limits, and optional add-ons. On average, renters insurance is affordable, often ranging from $15 to $30 per month.

Can I add extra coverage to my renters insurance?

Yes, optional coverages include flood insurance, earthquake insurance, replacement cost coverage, valuable items coverage, and sewer/drain backup coverage for more comprehensive protection.

How do I file a renters insurance claim?

If your belongings are damaged, stolen, or destroyed, contact your insurance provider to file a claim. Provide supporting evidence, such as photos, videos, or receipts. Once reviewed, your insurer will pay for eligible losses after deductibles.

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