Despite many tenants’ worries, renters insurance is relatively inexpensive. There are certain circumstances in which the cost of your renters insurance may increase, however. One of these instances is directly after you file a renters insurance claim.
Why Do Renters Insurance Claims Raise Your Rates?
Renters insurance works much the same as auto or home insurance policies when it comes to claims. If you file a claim and that claim is approved, the insurer is responsible for paying you compensation. It also increases the likelihood (in the insurer’s eyes) that you may file another claim in the future. So after you file a claim, it may remain on your policy for a set amount of time depending on the circumstances and severity of the incident.
Is Renters Insurance Required?
Although renters insurance isn’t generally required by state or federal law, it may be required by landlords when you are searching for an apartment or other rental property. Landlords require renters insurance in order to ensure that they and other tenants are protected in case of injuries or property damage lawsuits. A landlord’s commercial property insurance also does not generally cover your personal items, so renters insurance should be used to cover your belongings in case they are lost or damaged due to fire, wind, hail, smoke, theft, vandalism and more.
When Should You File a Renters Insurance Claim?
Not all damages or accidents may need to be filed as a claim on your renters insurance policy. In fact, some things are commonly excluded from basic renters insurance policies, such as:
- Water and flood damage
- Liability caused through criminal acts committed by the insured
- Liability caused by certain pets or dog breeds
- Damage to the physical rental space
Water and flood damage are not covered under most basic property insurance coverages and renters insurance is no different. Renters insurance also will not cover damages to the physical place, such as your apartment unit. If a fire damages the walls and ceiling of your apartment unit, for example, your landlord’s insurance will be responsible for covering the damages. The landlord can turn to you for compensation if you caused the fire, however.
Liability can be complicated for renters insurance if you share the home with another person or pet. Liability claims will be denied under your renters insurance policy if damages or injuries occur while the policyholder (or someone on their policy) is committing a crime of inflicts intentional damage. You may also find trouble getting certain pets covered by your renters insurance policy’s in certain circumstances. “Exotic” pets may not be covered, such as birds and reptiles, while certain dog breeds are also excluded. Commonly excluded dog breeds include Huskies, Dobermans, Rottweilers, German Shepherds and Pit Bulls.
If you have any questions about who is covered under your renters insurance policy, be sure to ask your agent.
However, if damages are covered under your renters insurance, have the damage appraised before filing a claim. If you cannot make your deductible, you may not be able to file a renters insurance claim. For example, say your belongings are damaged by a fire and the damage amounts to $300. Your policy’s deductible is $500 for personal belongings. Since you cannot reach your $500 deductible, you may have to pay for the damages out of pocket.
Other Factors Affecting Your Renters Insurance
Keep in mind that there are other factors that could be influencing the cost of your renters insurance aside from claims. Some factors are set in place but others you may be able to use to save money on monthly premiums.
- Credit score: Your credit score can affect your renters insurance premiums. A poor credit score can cause your renters insurance rates to rise while a good credit score can lower your premiums. You can build credit by paying off debts and credit cards.
- Location: Renters insurance premiums may vary depending on where you live based on the crime rate and your proximity to a fire station. Areas with a high rate of crime, such as theft and vandalism, can raise your renters insurance rates.
- Type of policy: There are different types of renters insurance policies. The more coverage you have, the more you may pay for renters insurance. However, you don’t want to risk having too little insurance and not being covered when it comes time to file a claim. Policy types also depend on the compensation you choose. Most renters insurance policies offer actual cash value, which offers compensation for your lost or damaged items after accounting for depreciation. A replacement cost value policy, on the other hand, offers compensation without accounting for depreciation. This type of policy may be more expensive, but it may allow you to replace your items more effectively.
Also Read: Will Renters Insurance Cover Me if I Start a Fire in My Apartment?
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