A majority of landlords now require every tenant to carry renters insurance. This insurance is designed to protect the renter, their property and the tenants around them.
Renters insurance covers three main areas:
- Liability: Liability insurance covers bodily injury and property damage that the renter may cause to someone else.
- Property: Unlike home insurance, renters insurance does not cover the physical dwelling. Your landlord’s insurance should cover any damage to the apartment complex or your unit. Instead, property coverage for renters insurance refers to personal possessions. This coverage provides compensation if your items are lost or damaged due to fire, smoke, lightning, theft, vandalism and more.
- Additional Living Expenses: Additional living expenses (ALE) helps with costs related to temporarily moving elsewhere if the rented property is under repair after a disaster.
What Does Personal Liability Insurance Cover?
Personal liability insurance is twofold. It is designed to cover both the renter and any damage or injury they may cause to others, or that may occur inside the rented property. One side of liability provides compensation for medical expenses a victim may suffer at the insured renter’s fault. The other side of liability compensates for property repairs if the insured renter damages another person’s property.
This insurance can also help the renter with legal fees and expenses if the victim of bodily injury or property damage decides to sue.
The limits of personal liability insurance varies. On average, personal liability insurance on a renters insurance policy covers around $100,000. Depending on your location and lifestyle, you may need more liability insurance. If you frequently have guests, you may want to consider higher liability limits.
Who Does Personal Liability Insurance Cover?
Personal liability insurance automatically covers the policyholder and immediate family members. It may also cover damage caused by pets. This coverage is limited, however. Pet damage is not covered if the damage they cause is directly to the rented property or to the renter’s personal property. Liability coverage will only cover pet damage if the pet damages another person’s property or causes them bodily injury.
A renters insurance policy will not automatically expand to your roommates, but you can add them onto your policy if you wish. It’s recommended that all renters carry their own renters insurance policy to guarantee coverage for themselves and their belongings.
How Much Does Personal Liability Insurance Cost?
On its own, personal liability insurance costs between $8 and $10 a year, which is less than a dollar a month. Renters insurance costs an average of $180 per year, which is around $15 a month. This price varies depending on various factors, including your:
- Credit score
- Claims history
- Value of your insured belongings
Extending Your Personal Liability Insurance
Insurers will only allow you to raise the liability coverage to a certain amount. If you believe that you need more liability insurance than is offered by your insurance company’s maximum liability limits, you can purchase a personal umbrella liability policy.
Umbrella liability policies step in once your other liability insurances reach their limit. For example, if you have $100,000 in personal liability insurance but owe a total of $150,000 for damages and legal fees, an umbrella liability policy will cover the remaining $50,000. This insurance policy can also help with your other liability coverages, such as for your car insurance. If you reach the maximum liability limits for your auto insurance policy after an accident, your personal umbrella liability insurance can step in to cover the remaining costs not covered by your car insurance policy.
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