A home insurance policy is said to be important to protect against the financial loss suffered if the house is damaged due to any natural or man-made calamities. That is why homeowners invest in home insurance plans so that they can face financial loss if their property is damaged. But, what about tenants? Do they need any insurance cover?
Yes, they do. Though tenants live in rented properties, they still need insurance for the contents of the home. If they own the household contents, they would face a financial loss if the contents are lost, stolen or damaged. Alternatively, if the household contents also belong to the landlord, the tenant has the financial responsibility to ensure that the contents are not damaged due to use. If the contents are damaged or stolen, they might have to compensate the landlord for the damage or theft. That is why a renter’s insurance policy comes in handy. Let’s understand what the policy is and why it proves useful.
What is renter’s insurance?
A renter’s insurance policy is a policy which covers the loss or damage of the contents of the house in which a tenant lives. These policies are home insurance plans which cover only the contents of the home. They are called renter’s insurance because tenants usually buy a home insurance policy covering their household contents.
What is covered under renter’s insurance?
Coverage under a renter’s insurance in India can be subdivided into the following categories –
Coverage for the contents of the home
A renter’s insurance policy covers the contents of the home against the following risks –
Fire
Theft
Natural calamities
Man-made calamities
Electrical breakdowns
Accidental damages
Coverage for financial liability
Besides covering the contents of the home, renter’s insurance policy also covers the legal liability that the tenant faces if any individual is hurt in the tenant’s home. For instance, if another individual (who is not the tenant, his/her family or the landlord) suffers any injury when at the home of the tenant, the tenant might face the financial responsibility to pay the injured individual’s medical expenses. This legal liability is also covered under a renter’s insurance policy.
Coverage for special assets
Under this cover, special assets of the tenant are covered. These assets can be high-value assets like jewellery, expensive gadgets, works of art, curios, etc. These assets are covered against damage due to natural or man-made calamities and theft.
Add-ons under renter’s insurance
A renter’s insurance policy, besides providing the above-mentioned coverage, also has different types of add-ons which help in increasing the coverage of the plan. Some common extensions include the following –
Rent for an alternate accommodation
If you are unable to live in the rented house due to damages which are being repaired, the policy pays you the cost incurred on seeking alternate accommodation
Coverage for portable electronics
Portable electronics like laptops, portable gadgets, etc. get covered under this add-on.
Jewellery and valuables cover
Under this add-on, you can get coverage for your precious jewellery and other valuable items.
Terrorism cover
If the contents of the home are damaged due to any terrorist activity, the damages are covered under this add-on.
Pedal cycle
This add-on extends coverage to a pedal cycle that you own. If the cycle is damaged due to fire, accident, natural or man-made calamity, the add-on pays for the loss suffered.
What is not covered under renter’s insurance?
A renter’s insurance policy does not cover damages suffered due to the following instances –
- Wilful damage caused deliberately
- War, rebellion, mutiny and related perils
- Precious items are not covered unless otherwise specified
- Very old content which has lived its useful life is not covered
- Any type of consequential losses are not covered
Why is renter’s insurance required?
A renter’s insurance policy proves to be a useful cover for tenants because of the following reasons –
- The policy covers the financial loss which tenants face if their belongings are damaged due to any calamity
- If the house suffers any damage, the landlord would pay for the repairs of such damages but if the tenants lose their belongings, the financial loss is theirs alone. This loss is covered by renter’s insurance policy which gives tenants financial relief
- Since the renter’s insurance policy also covers third-party liability, it gives tenants a sense of financial security that if any individual is hurt in their rented apartment they would not have to bear any losses
- If you accidentally damage the landlord’s assets in the house, the policy would give you compensation for such damages too
- The add-ons available under the policy increase the scope of coverage and give additional financial protection
- The premiums are very low and you can easily buy renter’s insurance policy for your household contents
How much does renter’s insurance cost?
The premiums of a renter’s insurance policy depends on various factors. These are as follows –
- The value of the contents to be insured affects the premium. If the value is high, the premiums would be high
- The risks faced by the property based on its location, age, safety and security measures etc. have a direct impact on the premium. If the risk is perceived to be high, the premiums would be high
- if add-ons are selected with the basic policy, the premiums would increase
Top #6 Things to remember when buying renter’s insurance
Before buying a renter’s insurance policy, the following things should be kept in mind –
- Ensure that all the contents are covered under the policy. If any content is left uninsured, you would have to bear the costs if such content is damaged or stolen
- The sum insured of the policy should be sufficient to cover the replacement cost of the contents which are damaged or stolen
- Choose the required add-ons if they suit your coverage requirements
- Always compare the available life insurance policies before buying one. Comparing allows you to buy the plan which has the most inclusive coverage features at the most reasonable premium rates
- Keep the bills and other relevant documents of the content that are insured under the policy
- If you have precious jewellery and other valuable items in your possession, get them insured under the available add-ons as their loss would be the most expensive to bear
If you are a tenant and are living in a rented house you don’t have any responsibility in case the structure of the house faces any damage. However, if the contents are damaged or burgled, you tend to incur a financial loss as the contents belong to you. Therefore, insuring the contents of the home is a wise move and since the premiums are not very high you can easily buy renter’s insurance policy. So, invest in a comprehensive renter’s insurance plan and secure your household contents against possible damages.
Frequently Asked Questions:
1. What is the difference between renter’s insurance and homeowners insurance?
A homeowner’s insurance policy is a policy which is bought by individuals who own their homes. These policies are usually bought to cover the structure as well as the contents of the home. a renter’s insurance policy, on the other hand, is bought by tenants and the policy covers only the contents of the home.
2. Who can buy renter’s insurance policy?
A renter’s insurance policy can be bought by tenants who are living in rented accommodation.
3. Can the coverage be increased if required?
Yes, you can increase the coverage level under your renter’s insurance policy when the policy is up for renewal.
