Does Renters Insurance Cover Your Car? | The Simple Dollar

Does Renters Insurance Cover Your Car? | The Simple Dollar

Auto and renters insurance may seem as if they overlap a bit, but when you compare the two different types of policies, the differences start to stand out.

Car and renters insurance actually work hand-in-hand, with each providing unique coverage for your car and belongings. Auto insurance covers any damage that occurs to your car from an accident or certain natural disasters. Renters insurance, on the other hand, covers the cost of any personal belongings inside your car, whether they were damaged or lost due to an accident or theft.

One common question that comes up about renters insurance is, “Does renters insurance cover car theft?” While renters insurance doesn’t cover car theft, it can help you replace any items inside your car due to theft. Here’s what you need to know about this type of coverage.

Do I need renters insurance for my car? 

If you’re a renter, you need renters insurance. Rates are quite affordable, and you may be surprised at how much a renters insurance policy actually covers. Renters insurance is designed to cover your personal belongings, both inside your rental unit and wherever your stuff happens to be, including your car or a storage unit.

If you do have a vehicle, that’s yet another reason to have renters insurance. A renters policy ensures your personal belongings are covered inside your vehicle.

Car insurance covers the “structure” of your car, the same way your landlord carries insurance to cover the structure of your rental. If you’re in an accident and you total your brand new car, your auto insurance covers the cost to replace the vehicle.

[ More: What Does Renters Insurance Cover? ]

What car insurance doesn’t cover are any items that were destroyed or lost because of the accident. For example, if you’re in a car accident and you had a valuable piece of jewelry in your car, your auto insurance would not pay for the jewelry replacement. If you have renters insurance, it would likely provide a replacement for the jewelry, based on the limits you have within your renters policy.

In what situations do I need renters insurance for my car?

There are several car-related situations in which having a renters insurance policy would benefit you, including:

  • Your car is stolen. If you have any personal belongings in your car that are lost when your car is stolen, your renters insurance would likely cover the cost.
  • You’re in a car accident and your personal property is damaged or destroyed. No matter who is at-fault, if your personal property is damaged or destroyed due to a car accident, then your renters insurance replaces it. Again, your auto insurance covers your actual car, while your renters insurance covers items inside your car.  
  • Natural disasters. Any covered natural disasters in your rental insurance policy will also cover damage or loss of your personal belongings in your car. For instance, if a fire destroys your car and your laptop was inside, you would be reimbursed for replacement of the laptop.
  • Smash-and-grab theft. If someone smashes your window and steals items from your car, your auto and renters insurance cover two different aspects. Your car insurance handles the damage to your vehicle, while your renters insurance covers the smartphone the thief took off with. 
  • Driving a rental car. Because a renters insurance policy covers your personal belongings no matter where they are, this includes a rental car. If your rental car is in an accident or stolen, you would make a claim to your renters insurance to cover any loss of personal belongings.

[ Next: How to Choose the Best Renters Insurance ]

What is not covered by renters insurance? 

As comprehensive and affordable as renters insurance policies are, there are situations where items are excluded from these types of policies.

  • Aftermarket accessories. If you’ve added upgraded stereo equipment or custom auto accessories, renters insurance does not provide replacement for these items. If you do have aftermarket accessories, look for an auto insurance policy where you can add custom equipment coverage to your policy.
  • Liability limits. Liability is included in your renters insurance and covers situations when someone is hurt while inside your rental unit. This liability does not extend to your car if you’re driving the vehicle. If someone is hurt while you’re driving, your auto insurance liability coverage would kick in.
  • Earthquakes and floods. While renters insurance policies include coverage for damage to belongings from fire, windstorm, hail and other natural disasters, earthquakes and floods are typically absent from a policy. If you leave your laptop in your car and there’s an earthquake that causes damage to the car and computer, your laptop isn’t included. However, you can add earthquake and flood coverage to your renters policy if you live in an area prone to these natural disasters.

How to save on renters insurance 

Renters insurance is affordable, with policies averaging around $180 per year, which breaks down to about $15 per month. While renters insurance is optional, don’t let a tight budget scare you from finding a policy that covers your personal belongings. You can look for ways to save on a renters insurance policy, including:

  • Bundling with car insurance savings. Almost all insurance companies offer incentives for purchasing both an auto and renters policy together.
  • Comparison shopping. Like auto insurance, comparison shopping for renters insurance is a great way to get the best policy for your budget.
  • Additional discounts. Be sure to inquire about additional discounts beyond bundling policies. Many carriers offer discounts for having smoke alarms, security systems or remaining claim-free.
  • Raise your deductible. The lower your deductible, the higher your premiums on your policy will be. You’ll have to pay your deductible every time you make a renters insurance claim. If you have a higher amount and are willing to pay more out of pocket each time, your premiums will be reduced.

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