Most tenants don't see the value in having renters insurance, in part because they are unaware of a coverage it provides: loss of use.
Along with coverage for personal property and liability protection, in the event a lawsuit is filed against a policyholder, renters insurance helps cover loss of use, or sometimes additional living expenses, if a home becomes uninhabitable. That might not sound like a good perk, but it could save a renter a lot of money.
Say a tornado or hurricane destroys a renter's home and they can't stay there until it is repaired. The cost of food and to stay in a hotel until they can return or find a new permanent residence could be thousands of dollars. A renters insurance policy could offset that financial burden during a time that would already be emotionally and financially stressful.
Coverage for additional living expenses is essentially the same across all renters insurance policies. As long as a home is deemed unfit to live in by a recognized authority, the loss of use coverage will activate. Companies typically provide a stipend each day as needed, up to a limit stated in the policy.
Most cover up to $2,000 or 20% of the policy's personal property coverage, whichever is greater. Assuming a typical personal property limit of $25,000 that would mean $5,000 of expenses covered.
In addition to a hotel stay and meals, some policies will also cover atypical travel costs incurred as a result of the temporary relocation. It doesn't have to be a subway or train ticket. Increase expenditure on gasoline might qualify.
Renters who live in areas subject to natural disasters are not the only ones who might find loss of use coverage beneficial. No matter how careful someone is, they might only be as careful as the neighboring tenant. A fire in an adjacent apartment, or even another free-standing home, might damage another residence and cause it to be uninhabitable.
Considering the coverage of renters insurance, it is relatively inexpensive.
The average annual renters insurance premium in the U.S. is $188 - far less than the average homeowners insurance premium at $952. It's much cheaper because renters policies do not cover the housing structure itself, which is the responsibility of the landlord or owner.