Renter's Insurance
Renter's insurance is often overlooked by tenants in apartments, houses, and condominiums because many renters mistakenly believe that their landlord's policy will cover them. Unfortunately, this usually isn't the case.
Where to Find Coverage
Most major insurance companies sell renter's policies including:
Policies can be purchased in person, over the telephone, and over the Internet. Generally, renter's policies carry annual, or sometimes quarterly, premiums. Monthly payment plans are rarely available since the premiums are so low.
Personal Property Protection
Renter's insurance covers a tenant's personal property that is housed inside the rental unit. This means the insurance company will give you money to replace your property in case of fire, theft, wind damage, some water damage, vandalism, and other covered events. Coverage typically includes clothing, furniture, stereo and TV equipment, jewelry, and everything else you own in your apartment.
Most policies will also help you with temporary housing should your primary residence become uninhabitable.
A typical renter's policy protects you in the event that someone is injured in your apartment. For example, if a guest slips on your newly waxed kitchen floor and sprains his ankle, your renter's policy will cover his medical expenses.
Do You Need a Renter's Policy?
Many people think that their landlord's insurance covers them. That's true up to a point. A typical landlord policy covers the structure in which you live, but not your personal property. Renter's insurance is necessary to cover your personal belongings should there be a fire, storm damage, vandalism, or a break-in. Even a small amount of property can be costly to replace if you lose everything all at once.
Renter's policies are generally inexpensive, often running as low as $100 per year. That's less than $10 per month to protect the things that you own.
There are two types of renter's insurance policies available:
- Actual Cost Value - ACV policies reimburse you for the actual value of your property, factoring in depreciation. For example, if your five-year old stereo is damaged, the actual cost policy would reimburse you the value of a five-year old stereo as opposed to the cost of a new stereo.
- Replacement Cost - Replacement cost policies, on the other hand, reimburse you for the amount to replace your destroyed item. If that same five-year old stereo is damaged, a replacement cost policy would allow you to buy a new, similar stereo.
The difference in cost between these two types of policies is usually small and is worth the difference.
As with other types of insurance, renter's policies have a deductible. That is the amount that you pay before the insurance company pays anything. The deductible applies to everything except for liability coverage and is the largest determining factor in setting your premium. The higher the deductible, the lower the policy premium.
Riders to Renter's Policies
Most of your personal property is covered in an umbrella renter's policy, but certain high-value items, such as artwork, jewelry, sterling silver, and antiques, are covered only up to a specified amount. To insure items over this amount, you must buy a rider to the basic renter's policy. To get this coverage, you will typically need to have the items appraised by a certified appraiser. Premiums for personal property riders are based on $100 of value.
The Value of Good Coverage
If you are a renter, think seriously about getting a basic renter's policy. Nobody thinks that a disaster is going to strike them, but if it does, knowing your property is protected can give you peace of mind during a difficult time and can get you back on track to replacing your belongings.
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