If you rent your home, you need a renters insurance policy. But what’s covered by a renters insurance policy?
Renters insurance, known as an HO-4 home insurance policy, is just what it sounds like. It covers the contents of your rental home against disasters like fire, theft, windstorm, hail, explosion, vandalism, riots, and more.
Renters Insurance Policy: Why You Need Coverage
You can choose a "named-peril" policy or an "all-risk" renters insurance policy. The difference is what disasters will be covered. With a "named-peril" policy, only those disasters (known as perils in the insurance world) listed on the renters insurance policy will be covered. In an "all-risk" policy, your things will be covered in the event of any disasters EXCEPT those specifically listed in the renters insurance policy as being excluded.
You can also choose between actual cash value or replacement cost renters insurance policies. The difference is in how you'll be paid for items lost or damaged due to a covered event.
An actual cash value renters insurance policy means the insurance company will pay you for the item's current worth– taking depreciation into account. If you go with a replacement cost renters insurance policy, the insurance company will pay you the amount that it will cost to replace the item, regardless of depreciation.
Renters Insurance Policy: What's Covered?
A renters insurance policy doesn't just cover your belongings. It also provides personal liability coverage for damage you or your dependents cause to other people or their property. This also includes your pets.
A renters insurance policy also provides additional living expenses (also known as loss-of-use coverage) if you have to move while the apartment or home you rent is repaired.