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APARTMENT RENTAL INSURANCE

Apartment rental insurance protects an individual or family who makes their home in an apartment not owned by them, but that is rented or leased from another person, the property owner.

People who live in a rented apartment can purchase rental insurance to provide financial coverage in case there is damage to the apartment or if someone is injured while on the premises, in much the same way that a homeowner purchases insurance to provide coverage against structural and other kinds of damage to the home, and in the event of injury to persons living in or visiting the home. Contrary to what many leaseholders believe, however, the coverage that the property owner maintains on the building does not cover the renter for damage to the renter's personal belongings, or for loss of property even as a result of theft.

Occupants are required to provide their own personal property and liability coverage, and are more and more frequently being required to provide proof of this at the time of the signing of leases. Apartment rental insurance is not a legal requirement, but good renters insurance is a wise precaution against possible future legal expenses, medical bills, or other financial obligations that could come as a result of a disaster or an accident.

The Importance of Rental Insurance

Apartment rental insurance provides liability coverage for renter for the area within the apartment itself, but not for the common areas of the larger building in which the unit is located It does not compensate the renter in any way if there is structural damage to the building. It is the property owner's policy that will cover those aspects. However, the property damage clause of apartment rental insurance will cover damage to, or loss of possessions stored in areas external to the home, particularly if they are listed in an inventory submitted early on.

In many instances, the person paying for the rental of an apartment is a college student or other single adult, maybe divorced, who could ill afford the expenses of a lawsuit or large medical bills that could follow a serious fall or other accident. Even the loss of valuable electronic equipment could present quite a hardship. Apartment rental insurance reduces or might even eliminate such financial liabilities. By taking this precaution, the student will be able to purchase a replacement for a lost laptop computer, for example; the divorcee would have the money to replace stolen valuables.

If a fire begins in the basement and damages the building rendering it uninhabitable for a period of time, the homeowner is compensated for loss of income, damage to the property, and lost possessions, per the homeowner's own coverage. The lessee of an apartment in the building will receive no financial relief unless that person had previously purchased apartment rental insurance.

If a natural disaster such as a flood or tornado were to occur and units within the building were damaged, the property owner will also be covered, under the standing homeowners policy agreement, for repairs and for losses sustained. The occupier, though, even if that person loses the entire contents of the rental home, will not be due for any compensation unless that person had previously purchased a policy for flood coverage insurance in addition to the standard apartment rental insurance.

Calculating Rental Insurance Costs

The premiums for apartment rental insurance, as for other types of rental insurance, are calculated on the basis of a number of different factors. First among these would be the value of the possessions being insured, and the maximum limits that the company agrees to pay when a claim is filed. The more valuable the property, the higher the premium, and the higher the liability coverage desired either for damage to physical structures or injury to persons, the higher the premium will be.

Renters will need to provide value estimates for the possessions they wish to insure, and must decide choose between actual cash value (ACV) or replacement value, which would provide enough money to replace or repair the item with no financial loss other than the deductible. The actual cash value is an estimate adjusted for depreciation over the age of the asset.

The deductible, which is the portion of the claims that the customer commits to paying, is agreed to at the opening of the policy. The amount agreed to will also affect the premium in direct proportions. This means that the premium payment will always be reduced if the deductible is increased, and vice versa.

The addition of any riders to the basic apartment rental insurance policy, such as coverage for natural disasters or other possible perils will cause corresponding increases in the premium, precisely because they provide increased coverage that could protect the renter in many additional ways. Their purchase, however, brings much valued peace of mind.