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The Importance of Renters Home Insurance, for Owners and Tenants

You will learn all about Renters Home Insurance, who needs renters insurance, what does renters insurance cover, why tenant insurance is important, also an example.

Overview #

Owning a rented house and renting it out to other people is something that most people often do, especially if the person concerned already has another residence as a private residence. Many people make rented houses a source of income, considering the amount of money made here can reach thousands of dollars per year. The value of this rent will certainly depend on the facilities and the house’s condition.

The better and strategically the location of a rented house, the greater the rental costs that will be obtained from the house. That is, of course, the selling value of the house itself is also high and fairly expensive. After all, a house is a high-value asset that can cost thousands to millions of dollars, so it is very important to protect it with the maximum protection, one of which is by using insurance services. Then, does the rented house also need insurance?

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Insurance for Rented House #

The Importance of Renters Home Insurance
The Importance of Renters Home Insurance: Rented house illustration

Even though the house is not inhabited by itself and is actually contracted out to someone else, the house must be maintained properly. There are many risks that can occur in this one asset, some of which can even cause large losses for the owner. Call it a fire or even damage caused by an earthquake, of course, things like this can make the entire house seriously damaged. Not in small amounts, the losses caused by these things can reach tens of thousands of dollars.

As a homeowner, maintaining and managing a house is certainly a mandatory thing to do. The use of insurance services is the right choice, where various risks that may occur in the house can be transferred to the insurance company. Homeowners need to anticipate these risks from the start, especially since the house will be occupied by the tenant and not under the owner’s full control.

But in reality, these various risks are not only potentially detrimental to the homeowner, because the tenants also have the same interest there. Various assets/goods that are the contents of the house are owned by the tenant, where various risks to these items are also important to be managed properly. If a risk occurs in the house (building), it may pose the same risk to the contents of the house itself.

Call it a fire, if there is a fire in the house, then not only the building, but all the items in it can also burn out. This incident can certainly cause considerable losses for homeowners. But this will certainly cause losses for the tenants, right?

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Insurance is Very Important for Owners and Tenants #

The Importance of Renters Home Insurance
The Importance of Renters Home Insurance: Home Owners and Tenants

The price of a house is certainly not cheap, especially if the asset consists of proper building construction and is in a strategic location. This is one of the reasons why homeowners are obliged to manage the risks that may occur in their assets. In addition to the building, the contents of the house are also important, because the value can also be quite high and require protection.

Basically, both landlords and tenants have a great interest in protecting their respective assets, so both need protection. Using a home insurance service is the right choice, where various risks to the house and its contents can be transferred to the insurance company.

Currently, there are many insurance companies that provide home insurance products, including additional policies for the contents at once. ACA is one of the largest insurance companies that have these products in their services.

There are many types of assets that can be insured at this company, including:

  • Building.
  • Household furniture.
  • Home supplies.
  • Machine.
  • Merchandise.
  • Inventory and finished goods.
  • Various other items.
  • Like other insurance companies, this company also provides a fairly complete guarantee and follows standard policies that apply in each country, such as:
  • Fire.
  • Lightning
  • Explosion.
  • Smoke and including the result of falling airplanes.

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In addition to the standard policies above, an extension of protection can also be done to get maximum protection. The extension of this protection includes several risks, such as:

  • Unrest
  • Landslide.
  • Floods, as well as the cost of cleaning debris.

But in the service, of course, not all risks can be guaranteed by the insurance company. This is usually stated on the exclusion policy that has been arranged in such away. The following are some of the risks that are not guaranteed:

  • Fire or explosion from self-combustion.
  • Short circuit (short circuit) or fire arises from the goods’ nature (inherent vice).
  • War damage.
  • Raid.
  • Actions of foreign enemies and other similar activities.
  • Nuclear reactions or radiation or radioactive contamination.

It is very important to examine some of the exclusion policies above from the start so that misunderstandings can be avoided and do not lead to misinterpretation of things that are guaranteed and not guaranteed by the insurance company itself.

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How is the Premium Calculation? #

The Importance of Renters Home Insurance
The Importance of Renters Home Insurance: Illustration of Calculating Insurance Premium Cost

In the Home Insurance, the premium will generally be calculated per year (12 months) at once.

Premium = (Amount of Sum Insured * premium rate per year) / 1000

The Sum Insured is the value of the asset to be insured (excluding land value).

Example: #

A house with a price of USD 40,000 and its contents of USD 20,000 (Amount Sum Insured = USD 60,000), will be insured by assuming an annual premium rate of 1.5 / 1000.

Premium = (USD 60,000,- x 1.5) / 1000 = USD 90 per year.

If you look at the fact that the owner and tenant of the house are both interested in this insurance, it would be very wise if the above premiums are paid together (each USD 45 per year).

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The Conclusion #

Get Maximum Protection

Rented houses require maximum protection, both for the owner and for those who rent and occupy the house. Use home insurance services for this one asset, so that various risks can be managed properly. Dividing insurance premiums is the right choice, considering that the owner and tenant both have an interest in the house.

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