What Is Renters Insurance?
Renters insurance protects people who rent their homes in case their personal belongings are damaged, destroyed, or stolen. It also protects tenants from having to pay out of pocket if someone else is injured in their rental home.
Whether you live in an apartment, townhome, or house, renters insurance can help you stay afloat and start over if you suffer a loss. Your personal property is valuable, even if it feels commonplace to you because you live with it every day. Add up the televisions, electronics, furniture, kitchen gadgets, and some prized possessions like jewelry or pieces of art, and you’ll likely have thousands of dollars worth of property that needs to be protected.
Do You Have to Have Renters Insurance in Michigan?
In Michigan, you’re not legally required to have renters insurance in order to rent a home. However, some landlords include clauses in their leases that require renters insurance to rent one of their properties.
Roughly 54% of Grand Rapids residents own their homes, which means an estimated 46% rent. Even though you’re not legally required to purchase renters insurance, you may find it an affordable way to protect yourself in case the unexpected happens.
What Is Covered Under Renters Insurance?
Renters insurance covers three main categories of potential risk: personal belongings, personal liability, and additional living expenses.
1. Personal Belongings
When you think of renters insurance, you probably think of this type of coverage. Renters insurance protects your personal belongings, such as your furniture, electronics, clothing, appliances, and more.
If your belongings are especially valuable, then you may need to add a rider to your policy to extend your coverage. Riders are typically necessary to insure items like jewelry, expensive electronics, valuable artwork, or treasured heirlooms.
Keep in mind that renters insurance only covers your belongings from certain risks, such as:
- Theft or vandalism
You’ll need to purchase separate policies to protect yourself from damage caused by floods or earthquakes. Also, it’s important to know that renters insurance does not protect your belongings if they’re damaged due to simple wear and tear.
2. Personal Liability
If someone is injured at your home, then you may be liable for their expenses related to their injuries. You can also be liable if someone else’s property is damaged while they’re in your home.
Your renters insurance policy can protect you in case someone sues you for losses or damages suffered in your rented home. It will cover the expenses you’re liable for up to your policy limit, minus your deductible.
3. Additional Living Expenses
Circumstances that damage your personal possession may damage your rental home itself. For example, even if your home survives a fire, it may not be safe to live in it for weeks.
Renters insurance offers loss of use coverage, also known as additional living expenses. This form of coverage pays for your bills in case you need to live somewhere else temporarily.
What Is Not Covered by Renters Insurance?
Renters insurance doesn’t include coverage for every kind of risk. Some kinds of risk are covered by other forms of insurance, such as:
- Landlord insurance: Your landlord has their own form of insurance to protect their property in case of certain types of water damage or vandalization. It also takes effect if someone is injured at the property but not in your rented unit (e.g., on the communal stairs between apartments).
- Flood insurance: If you live in an area prone to flooding, you’ll need to purchase an additional form of insurance to protect yourself.
- Earthquake insurance: Similar to flood insurance, earthquake insurance is sold separately from renters insurance for people who live in areas prone to that risk
- Umbrella insurance: There are limits on your renters insurance that may be too low to cover your valuable belongings. You may want to look into purchasing umbrella insurance to make sure you have full coverage.
Does Renters Insurance Cover My Roommates?
Typically, not everyone in a unit is covered by a single renters insurance policy. If you live with roommates, they’ll need to be specifically added to your policy, or they will need to purchase their own renters insurance, depending on the carrier.
How Much Does Renters Insurance Cost?
A big factor in the cost of your renters insurance is the type of coverage you choose. There are two types of renters insurance: actual cash-value coverage and replacement coverage.
Actual cash-value policies provide financial compensation that equals the value of your possessions when they were damaged or lost. This may be less than what you paid for them, since most possessions depreciate over time.
Replacement coverage provides compensation so you can replace the original value of what you lost. Replacement policies are typically more expensive than actual cash-value ones.
Your renters insurance rate will depend on a number of other factors, including:
- The size of your policy: Renters insurance policies that offer minimum coverage limits are more affordable than policies with larger limits.
- Where you live: It may cost more for renters insurance if you live in an area with a higher crime rate.
- How many people are on your policy: Adding your roommates to a single policy may drive up the cost.
- Type of residence: The type of home you rent may affect your renters insurance rate. No residence is universally safer than another, but each type of residence carries its own risks. For example, if you live in an apartment, you need to be protected in case someone in the same building accidentally starts a fire.
- The insurer you choose: Who you get your renters insurance from can determine your rate. Independent insurance agents can determine which policy will best meet your needs for the best rate.
Deductibles vs. Rates
Keep in mind that the total cost of your renters insurance includes both your deductible and your rate.
Your deductible is the amount of money you agree to pay before the rest of your policy takes effect. For example, if you have a $100,000 policy with a $500 deductible and your electronics are stolen, you’ll need to pay $500 first before your $100,000 policy covers the rest of your losses.
Your rate is the bill you pay each month to continue having renters insurance. Renters insurance rates are often less expensive than other forms of insurance, with rates as low as $10 or $15 a month.
The relationship between your rate and your deductible is typically inverse. This means that if you have a higher deductible, you usually have a lower rate, and if you have a lower deductible, you usually have a higher rate. An insurance agent can help you find a policy with the right rate and deductible for you.
If you have jewelry, fine arts, guns, collections of stamps, coins, etc., then you will need to schedule these items separately so you have coverage in case of a loss with these items. If they are not scheduled on the policy, then you will not receive full compensation for them.
How Do I Get a Renters Insurance Quote in Michigan?
Independent insurance agents like Doyle & Ogden insurance offer a variety of renters policies with multiple carriers. We can help you find the right coverage at the best price. Did you know that by combining your auto and renters policies with the same company you can save? To get a quote, contact our agents today.