Insuring Your Home is Essential
Why you need renter’s insurance
When you rent an apartment or home, you are not required to get insurance. The owner of the property pays the insurance on the property.
But that only protects the building itself!
Any damage that occurs to the property you have in the rented apartment or home would not be covered. So, if a tornado lands on your apartment, your landlord will get the building repaired, but they would not replace your stuff and neither would their insurance.
What does renter’s insurance cover?
- Damage or loss of personal property. The insurance will cover the cost to replace any stuff that is damaged in events outlined in your policy. Events usually include things like natural disasters, fire, or theft.
- Injury. If someone is injured on your property and you are held responsible for that injury, your renter’s insurance would cover their medical costs.
- Damage to other people’s property on your property. If someone’s property is damaged while it’s in your home and you are held responsible, your insurance may pay to repair or replace it.
- Living expenses. If you can’t live in the home as it is being repaid, the insurance may cover costs for you to live somewhere else while the damage is repaired.
Smart Money Tip: Getting renter’s insurance is essential
Although you are not required to get renter’s insurance, you should seriously consider getting it once you move out if you start renting. One natural disaster could wipe out all your electronics and other belongings, and those could be costly to replace.
Homeowner’s insurance
Once you buy a home, you will move up from renter’s insurance to homeowner’s insurance.
But unlike renter’s insurance, homeowner’s insurance is almost always required. Technically, homeowner’s insurance is not required by law. If you pay for a home with cash, no law says you must have insurance. But most people don’t buy homes with cash.
If you buy a home by getting a mortgage, the lender will require you to get homeowner’s insurance. In fact, the annual premium may be rolled into your monthly mortgage payments. So when you pay your monthly mortgage payment, you also cover part of the insurance premium, too.
Extra homeowner’s insurance
Basic homeowner’s insurance doesn’t cover everything. It covers:
- damage to your property only in certain events
- injury to a person or their property that happens on your property
- living expenses if you can’t live in your home due to damage
But while some natural disasters are covered by the policy, others are not.
If you live in a flood zone (a place that is likely to flood), then you must purchase flood insurance. Depending on where you live, you may also need fire or wind insurance.
These specialized types of insurance would then pay for damage caused by that specific type of event.