What the Landlord covers
When you rent a property, the landlord will normally be responsible for insuring the building and anything fixed or fitted to the property. They are not always legally obliged to do this, but most mortgagors will require it and sensible homeowners will want to cover the cost of damage to their property.
What you need to cover
If they have provided contents for the property as well, such as furniture and carpets, they may cover this by their own contents insurance too. However, you will be responsible for insuring anything that you have brought to the property with you, from furniture to jewelry. The coverage for loss of personal property may be either on a full replacement value basis, where the full cost of replacement is covered, or for a lower value after you take into account the item's depreciation.
As well as personal property, your insurance policy may cover the loss of use of the premises. For example, if you are unable to stay in the property due to fire or water damage, the insurer will cover the cost of alternative accommodation. It should also cover your personal liability for injury to anyone using the premises. You need to read the policy carefully, as what is excluded can be as important as what is not. You may also want to consider add-on insurance for damage caused by hurricanes, or flooding for example, which isn’t included in many policies.
The lease may require it
Many leases will also now require the tenant to take out renter’s insurance, so that if the tenant damages the property, the landlord or other tenants can claim against this it.
Risk of underinsuring
One of the mistakes that people often make is underestimating the value of cover that they need. When you actually sit down and add up the value of everything you have in the property, you may be in for a surprise. If you do substantially underestimate your cover, the insurers may well punish you by reducing any payout commensurately. So if you are say 30% underinsured, they may only pay out 70% of the value of any one item on a replacement basis. You may also need to separately insure particularly valuable items.
A basic renter’s insurance policy can be very affordable, less than $1 per day in some cases. Several providers offer free online quotes, so you can easily compare prices and levels of coverage.