Renters Need Insurance Too

Many renters aren’t even aware that they need their own insurance, mistakenly believing that their landlord’s policy covers them. Your landlord’s policy will cover the building itself from damage or loss. But if your home is burglarized or destroyed by fire, your landlord’s policy provides no protection for your personal possessions. Renters insurance is inexpensive and provides great coverage for millions of families.

Most landlords’ policies cover only structural damage to the building and liability arising from the landlord’s actions. So if a fire hits, he would be able to rebuild. But your prized flat-panel TV would not be covered. Likewise, if your building were burglarized, your landlord’s policy would not pay to replace your stolen items.

With prices for renters insurance often well below $20 a month, that’s not a wise risk to be taking. So what are the main things to look out for when considering purchasing renters insurance? As with any insurance policy, pay close attention to the deductible. A higher deductible means you will have to pay more of any claim from your own pocket. The advantage is that your premium will be lower.

Another factor that has a significant effect on premium levels is whether you choose a policy that will reimburse you for the actual cash value of your lost or damaged goods, or replacement cost value. Actual cash value is the cheapest option and will pay to replace your possessions minus a deduction for depreciation. Replacement-cost coverage costs more. On the plus side, it will pay the actual cost of replacing your possessions with items of “similar kind or quantity” with no deduction for depreciation.

Types of Coverage

Renters policies typically provide “named peril” coverage. This means the policy specifically lists the perils, or causes of loss, that it covers.

The most common covered perils are:

• Fire or lightning
• Windstorm
• Smoke
• Vandalism or malicious mischief
• Theft
• Water damage from failure of plumbing or appliances
• Frozen water pipes
• Hail
• Explosion
• Vehicles or aircraft

Renters insurance also protects your personal belongings when they’re off premises. For example, if your suitcase is stolen while you’re on vacation, your renters policy will likely cover you. The same applies to property stolen from your car.

What Property Is Covered?

Policies usually provide coverage of typical household items. These include:

• Stereo systems and television sets
• CDs, DVDs, videos, and tapes
• Cameras and other photography equipment
• Movable appliances
• Sports equipment
• China and glassware
• Clothing
• Books

Policies often place separate coverage limits on more expensive, unique or easily stolen items. These include:

• Home computers
• Cash, including coin collections
• Checks, traveler’s checks, and securities
• Jewelry and watches
• Precious and semi-precious stones
• Comic books, trading cards, and stamps, including collections
• Antiques and fine art
• Goldware and silverware (theft)
• Rugs, wall hangings, and tapestries
• Firearms (theft)
• Furs or clothing trimmed in fur
• Boats or other watercraft, and related equipment

If you have any of these items, you may want to consider purchasing a “floater,” which is a separate policy that provides additional insurance for a specific valuable or valuables. Floaters cover your high-value items for perils not included in your renters policy, such as accidental loss.

Liability

Renters insurance also provides important liability protections. When you cause property damage or bodily injury to another person through your own negligence, that person can sue you for civil damages. For instance, if you leave the tub running and the water leak damages your neighbor’s paintings; you could be forced to reimburse the damage. A renters policy will pay any damages or settlements you become legally obligated to pay. It will also cover your legal defense costs, or attorney and court fees.

Your liability coverage protects you no matter where the injury or property damage occurs. If you accidentally trip and injure someone while playing touch football in your local park, for instance, your coverage would apply. Like homeowners policies, renters policies exclude claims for injury or property damage you cause while operating a car, boat or other motorized vehicle. Auto and or boat policies are specifically designed to cover this type of claim.

Like a homeowners policy, a renters policy also includes “medical payments to others” coverage. This coverage applies to injuries to people other than you and your household members that occur on your property. Insurers offer this coverage to help policyholders avoid the hassle and expense of having to go to court for a relatively minor injury claim. The limits for this coverage (the maximum amount a policy will pay) vary greatly between policies. In general, though, your policy will have a much lower limit for medical payments claims than for liability claims. Some pay as little as $500 per person, while others might pay up to $25,000.