What is Tenant Insurance?

Renters rarely think about the need for insurance to protect personal items or insure against potential liability. This is a mistake, because tenant insurance is just as important as many other types of financial protection. Tenant insurance protects the personal items that a renter has in his leased apartment or home. Coverage may include partial compensation — or full replacement value — for the loss or destruction of these items. As with any insurance, the amount of coverage is dependent upon the policy, the deductible, and the amount a person wishes to pay in monthly premium costs. The policies are sometimes designed to limit personal or medical liability should a visitor be injured while inside the property rented by the tenant.

The owner of a property virtually always carries his own insurance, covering concerns such as property damage, fire, and liability. If the property should happen to burn down, the tenant quickly learns that none of his personal items are covered. The owner will receive compensation to repair or rebuild the property, but the tenant will receive nothing. A renter might not think he possesses enough property to warrant purchasing tenant insurance, but he would usually be wrong. Many tenants have learned this lesson the hard way.

Just a few simple items, such as a laptop computer, flatscreen TV, musical instruments, or jewelry items, can easily be valued in excess of $10,000 US Dollars (USD). The annual tenant insurance premiums for this amount are often less than $150 USD. Tenant insurance also frequently covers loss of use. Policies including a "loss of use" rider provide payments to the tenant for the time he is unable to occupy the damaged property. In some cases a lump sum might be offered, enabling the tenant to relocate to a new dwelling.

A person might opt to pay a bit higher premium and insure his personal possessions against theft. This is a particularly good value for students or younger individuals, who are prone to having roommates or sharing a residence. Not everyone has the good fortune to share an apartment with a trusted friend or family member, and entering into any business transaction with a stranger is always a risk. It might not be a comforting notion to think that the person in the spare bedroom covets the tenant's laptop or DVD collection, but it is not out of the question. If those items turned up missing, the small premium for tenant insurance would seem well worth the cost.