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Debunked: 7 Myths About Tenant Insurance

by Editor | ezLandlordForms
House and Key Rental Property

If you have ever rented a house, condo, or apartment, you might be familiar with the concept of tenant insurance. You might even wonder why you even need tenant insurance at all. Before you dismiss it as an unnecessary expenditure, you must analyze if your bias against tenant insurance is fortified by myths and misconceptions surrounding it.

Before we descend into the rabbit hole of fallacies about tenant insurance, it is important to understand what it entails.

What is tenant insurance?

When you lease a hous or property, tenant insurance, also known as renters insurance, financially protects you against damage to your personal property, and liability, and covers additional living expenses.

Typically, a renters insurance provides three main types of coverage:

  • Personal Property Coverage: It protects you from monetary losses if your personal belongings and valuables are damaged due to an unforeseen accident in your rented property.
  • Liability Coverage: It protects you against unexpected medical expenses if you, your guests, and other cohabitants of the house are injured within the premises of your rented property. It also covers any accidental damages that you might have caused to others’ property.
  • Additional Living Expenses: It protects you from incurring the cost of alternate dwelling arrangements if your rented house is in an unlivable condition and is undergoing repairs.

Myths about tenant Insurance

1. Landlord’s home insurance will cover damages to my belongings.

It is not uncommon for the tenants to think that the safety of their personal belongings is the landlord’s responsibility. After all, they are paying rent! Unfortunately, this assumption is just a myth as a landlord can’t be held accountable for damages to a tenant’s personal property.

In other words, your landlord’s home insurance doesn’t cover any damages to your furniture, TV, laptop, mobile phones, jewelry, kitchen appliances, electronics, documents, and other valuable possessions.

Thus, if you don’t have renters insurance, you might incur hefty financial losses in the event of an accident such as fire or flooding damaging your personal belongings.

Check if your landlord has worked with a professional surveyor to determine the correct boundaries of the property so that you know exactly what your insurance covers.

2. A tenant is not liable to pay for injuries to others on the property.

Accidents happen all the time. From tripping over a wire to malfunctioning electrical appliances, plenty can go wrong while you are entertaining guests. Surely, you don’t have to pay for injuries to others due to an accident in your rented property, right?

You couldn’t be more wrong! Due to an unfortunate turn of events, if someone gets injured under the roof of your rented house, you are liable to pay for their medical expenses and cover any damages caused to their personal belongings. If you don’t pay for your guests’ injuries or their personal property damages, they are well within their rights to take legal action against you.

Having tenant insurance can be extremely beneficial in such instances as the policy provides liability coverage to pay for medical bills related to your guest or cohabitant’s injuries as well as pay for any damages to others’ properties.

Please note that renters insurance doesn’t provide any coverage for damages caused to the building structure by the tenant. If you are a landlord, then you must think about buying a landlord’s insurance as standard homeowners’ insurance doesn’t pay for building damages accidentally caused by the tenant.

3. Renter’s insurance costs a lot.

Another myth that impacts the tenant’s bias against renters insurance is that they are very expensive. On the contrary, renters insurance costs a lot less compared to homeowners’ insurance.

Since renters insurance doesn’t cover damages to the condo unit or building structure, they are a lot more affordable than homeowners’ insurance. For example, the average cost of renters insurance in New York City is $174 annually which comes up to $14.5 per month.

With renters insurance, a tenant has the flexibility to choose the type of coverage and coverage amount they want for their personal belongings while adjusting the deductible to lower the monthly premium cost.

4. My personal items are not worth insuring.

A big misconception among tenants is that their personal property is not that expensive and is not worth insuring. If you share similar views about the worth of your belongings, you must think about it more objectively.

For example, your old electronic and electrical appliances might not have a great monetary value. But if they were to be accidentally damaged, it might cost you a lot more to purchase brand new appliances.

Another example that you must consider is the time and money it would take to get a copy of important documents like bank statements, checkbooks, passports, college degrees, etc. if they were to be damaged in a fire or flooding accident.

5. Renter’s insurance is mandatory by law.

It is a popular belief that buying renters insurance is legally mandatory to rent a house, condo, or apartment. Contrary to this belief, you are not legally required to purchase renters insurance while renting or leasing a home.

However, in most cases, tenants are contractually obliged to buy renters insurance by landlords and property management. This is done so that the tenants can’t sue the landlords in the event of any damage to the tenant’s personal property. It also waives off any liability of the landlord in the event of personal injury to the tenant or any other cohabitants of the house.

6. The landlord will pay for my hotel bills/rent if I’ve to move out temporarily.

If the event of accidents that lead to the rented property being deemed uninhabitable such as fire, flooding, or electrical failure, your landlord is not obliged to pay for your alternate living arrangements. This means you are on your own to pay for hotel rooms, food orders, etc. The longer it takes for the repair of your rental unit, the more money you will have to shell out of your pocket on your temporary living arrangements.

Thankfully, tenant insurance covers your additional living expenses in emergencies that require you to temporarily move out of your rented house. The insurance pays for hotels or short-term rentals, dining out expenses, etc.

However, if the landlord wants the tenant to move out temporarily for property renovation or personal use, they are obligated to serve a notice to the tenant in advance, and might also need to pay for the tenant’s hotel expenses.

7. I don’t need tenant insurance as I am a responsible tenant.

Lastly, you might think that you are an ideal tenant who knows how to take care of the rented unit and your personal belongings. When you are a responsible tenant, you don’t need renters insurance, right?

Truth be told, accidents can still happen in the rented house for no fault of the tenant. For example, you can be extra vigilant and overly cautious as a tenant but a fire can still break out if there is faulty wiring in the leased property. That’s why it makes good sense to purchase tenant insurance just to be prepared for worst-case scenarios.

In conclusion, renters insurance is like a safety net that will protect tenants from financial losses due to accidents that might occur within the rented accommodation. If you are a landlord leasing your property, it is highly recommended that you insist on the tenant buying renters insurance to safeguard yourself from any form of legal liabilities towards the tenants and their belongings.

Contributing Author: Cinu is a Blogger who has a wide experience in delivering content on law, health, finance, real estate, and technical fields. He is a jack of all trades and always swims against the tides in terms of writing.

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