Renters Insurance as a Whole

Renters insurance generally covers losses to your personal property from: fire or lightning, windstorm or hail, explosion, riot or civil commotion, aircraft accidents, vehicles, smoke, vandalism or malicious mischief, theft, volcanic eruption, falling objects, weight of ice, snow, or sleet, water-related damage from home utilities, and electrical surge damage.

You’ll note that while volcanic eruptions are included, floods and earthquakes aren’t. If you live in an area prone to either, it’s recommended to buy a separate policy or get a rider on your existing policy. In some costal regions. when hurricanes might pose a threat, you might also need to buy a separate rider to cover wind damage. As always, you need to check the details of your policy.

What Should I Consider When Buying Renters Insurance?

One thing to look at is whether the renter’s insurance company will offer “actual cash value” or “replacement cost coverage” for your belongings. As the name implies, ACV coverage may pay only for what your property is worth at the time of your claim.

Let your agent know about any particularly valuable items you have. Jewelry antiques and electronics may only be covered up to a certain amount.  If you have some items that are unusually expensive, you may need to purchase a separate rider. If you don’t buy that additional coverage up front, you are not likely to be able to recover the damages later in a claim.

How to Ensure You Are Buying the Right Level of Coverage

In order to ensure that you are buying the right level of coverage, as well as to prepare for the unlikely event of a claim, it is important to take inventory of your personal belongings. Unfortunately, many of those only figure out that they didn’t have enough coverage after they have a problem. Ideally, your inventory should list each item, its value and serial number. Another helpful tool is videotaping or taking pictures of your belongings. Photograph or videotape each room, including closets, open drawers, storage buildings and your garage.

You should also consider your living expenses in the case of an emergency. If your apartment or condominium becomes uninhabitable for any reason covered by your policy, your renter’s insurance will most likely cover your “additional living expenses” Generally, that means paying for you to stay somewhere else and helps with food coverage temporarily.

Liability Coverage

You should also carry at least some liability coverage.

Liability protection is generally standard with most renters’ policies. This means if someone in your unit slips and falls, you’re covered for any costs, up to your liability limit. If this person sues you, you’re covered for what they win in a court judgment as well as your legal expenses, up to your policy’s limit.

Increase your deductible and make sure you can afford to pay out of pocket for whatever level of deductible you choose. If you’re thinking about getting a dog, you might want to think twice. Some insurance companies are reluctant to write policies for owners of certain breeds, especially if those owners are renters. Most insurers offer a discount for “protective devices,” including smoke and fire detectors, burglar alarms and fire extinguishers. Check if your apartment has these. Some insurers might offer discounts to policyholders who are over age 55 and retired. Others might offer a discount if you buy both an auto and renters’ policy, called a multi-line or multi-policy discount.

Sources:

1. Renters Insurance, Insurance Information Institute.