Picture this: you return from a fun night out with friends, only to see the door to your apartment hanging open. Your stomach drops, anticipating what you’re going to find – or not find – inside.
Or this – after a fire in the apartment below you, your entire wardrobe now reeks of smoke.
Or how about this – someone trips over a cord across your living room floor and breaks their leg, leading to extensive medical bills.
Who pays in the aftermath of these scenarios?
Well, if you don’t have an insurance policy of some sort…the answer is YOU.
Although dealing with any of the above situations isn’t ideal, it’s a lot easier if you have some form of residential insurance. Without it, you may be stuck with a very big bill for replacing your own items or even a lawsuit. Despite the clear benefits, only 41% of renters in the US are protected by an insurance plan of some sort, according to a 2016 Insurance Information Institute Study.
It can definitely be overwhelming to sit down and sift through the maze of options to figure out what’s best for you now. Luckily, RadPad can help you sort through all the information to make the right choice for your personal situation. Here’s a breakdown of the various types of residential insurance you could potentially purchase:
Renter’s Insurance: Standard renter’s insurance, known as an HO-4 Policy, will reimburse you for losses or damage to property due to sixteen specific events (listed out on NerdWallet here). It covers things such as fires, falling items, theft, and plumbing accidents. Standard renter’s insurance does NOT cover natural flooding or other specific “perils,” which leads us to –
Flood Insurance: Yes, many standard renter’s insurance policies cover some weather-related scenarios – but flood insurance is almost always carved out. If you live in an area prone to flooding, you would be well served to add on a flood insurance policy in addition to your standard renter’s or homeowner’s insurance through the National Flood Insurance Program. Obviously, you hope you’ll never need the coverage– but if you do, you’ll be ecstatic to have it.
Liability Insurance: Although many costs of maintaining a rental property belong to the landlord or management company, if someone suffers an injury in your home due to your negligence, they could potentially bring a lawsuit against you. A liability insurance policy is designed to give you several thousands of dollars of coverage in the event of a lawsuit. This insurance could also potentially cover you if your dog bites a visitor to your home; however, you want to check this specifically from policy to policy, as the size/breed of the dog is a factor in the price. Make sure Fido is covered as a member of your household!
Jewelry Insurance: Often, an engagement ring is the first high-value piece of jewelry someone owns or purchases. Coverage on regular insurance policies can be limited for these types of items, so you’re best served to list it as a one-off item on your policy. This is called “scheduling an item” or “adding a rider.” Typically, the cost of insuring an expensive item is 1-2% per year of the total appraised value of the jewelry. Typical wear-and-tear isn’t covered, but theft, disappearance and straight up loss (whoops!) are.
So, how do you know how much insurance you need? Prior to getting a policy, creating a detailed inventory of the items in the home and how much they cost (along with photos) can help you demonstrate their value in the event of filing a claim. Asking yourself how much it would cost to replace everything in your home if you had to buy it brand new in a store today is also a good way to get a ballpark number. The value of the items you’ve accumulated over the years can surprise you!
One additional element to keep in mind when selecting a policy is the actual cash value versus the replacement cost of your items. Policies cover EITHER that replacement number you came up with OR the actual value – an amount that takes into account that older items may lose value over time. You will typically pay less for actual-value coverage, but replacement cost may be worth paying a bit more each month to ensure you have enough to actually repurchase all the items you need.
When you’re renting early on in your professional life, renter’s insurance that can help you replace the value of your stolen or destroyed items can be a lifesaver. As you get older and build your net worth, it makes sense to add on liability insurance and jewelry insurance for any larger purchases. And as you continue to move forward in your life, perhaps purchasing your “forever home,” you want to make sure that you have the right protection for your property, your possessions, and your family.
Sorting through all these options and having to consider worst case scenarios can seem overwhelming – which is why RadPad created an app to help you manage all things rental-related, including a way to shop for comprehensive insurance right from your phone. Compare rates and plans and quickly determine what type of residential insurance makes the most sense for where you are at this stage in your life.
RadPad can help you plan for the worst, then get back you to living your best life – fast. Because let’s face it—your time and energy are better spent on things you really enjoy (like finding the best happy hour in your ‘hood). Cheers!