Everything You Need to Know about Renter’s Insurance

By Diane Tait

Image courtesy of flickr

If you own your home, chances are you have homeowner’s insurance.  That’s because your home and everything in it represents a huge investment.  Should the worst come to pass and a fire should break out in your home, or a pipe should burst, you don’t want to dig deep to cover the costs.  If a burglar breaks in and steals your most precious possessions, you want to be able to make yourself whole without digging a hole in your wallet.  That’s why you carry homeowner’s insurance.

So why do most renters not carry renter’s insurance?  Granted, the home in which they live doesn’t belong to them.  But most everything in it does.  Should the worst happen and fire, theft or a burst pipe occur, the renter could wind up behind the financial eight ball in a hurry.  What’s even worse, is the reason many renters don’t have renter’s insurance is because they have a lot of misconceptions about these policies.  To allay your fears, I am dedicating this week’s blog to exploding the misconceptions you may have.

1.      Renter’s Insurance is Expensive – For less than the cost of a dinner for two, you can have piece of mind that while you’re away from home your belongings are covered.  So too are any medical and legal expenses that should arise if an accident occurs in your rental.

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2.      My landlord has me covered – While your landlord may be the salt of the earth who is quick to repair a leaky roof or replace the water heater when it goes down, that’s where his or her largesse ends.  Should the property be damaged by fire or flood, while the landlord will repair the damage to the property, don’t expect to be reimbursed for any of your personal possessions that were damaged or destroyed.  That’s because your landlord’s insurance doesn’t cover your belongings.  While a landlord will be quick to replace a busted fridge, don’t expect a check for any of your food that spoiled within it.  That’s what renter’s insurance is for.  Another thing your renter’s policy will cover that your landlord won’t would be the cost of staying in a hotel should you be forced to vacate your rental unit while the landlord repairs the property.  (Since we get so many major storms in Florida, this alone could make it worth the cost.)

3.      I don’t own enough to justify the expense –  A big misconception about renter’s insurance is that it only covers personal belongings.  This couldn’t be farther from the truth. Aside from compensating you for loss of personal property, renter’s insurance covers everything from damage to other’s property, to personal liability and medical expenses.  That’s right, if a guest in your home is injured, not only will renter’s insurance cover any medical expenses your guest may incur, if you are subsequently taken to court, it will also cover your legal expenses as well.  If a sink or bathtub overflows in your unit and damages the one downstairs, do you want to pay for the damages that result, or would you rather have the insurance company stroke a check?

4.      I had a friend who filed a claim who didn’t get enough to replace what was lost – Just as with homeowner’s insurance, a policy holder may opt for either replacement cost coverage or actual cash value. If you opt for cash value, you will receive less than the replacement cost, since a 5-year old digital camera is worth less than a brand new one.  If your friend had opted for replacement cost coverage instead of cash value, he or she would have received a check sufficient to replace the item.  (Make sure you talk to your agent about the difference.)

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5.      I had a friend who lost everything in a flood.  Even though the friend had renter’s insurance, he didn’t get a penny back for his lost possessions. – I have news for you, neither did the landlord unless he or she had flood insurance.  Both homeowner’s and renter’s insurance excludes flood damage unless you add a rider to your policy.  Neither will it compensate you should your belongings be damaged by a sewer backup. Other things that won’t be covered without a rider include compensation for fine art, jewelry, fur coats or other valuables.  If you have any of these, tell your insurance agent about them before your policy is issued.

6.      How much renter’s insurance should I have? – That all depends on how much your belongings are worth.   The average person in the US owns between $20,000-$30,000 worth of personal possessions.  When you consider the amount of clothing, jewelry, appliances, electronics, tools and other items you own, it adds up fast.  The question you need to ask yourself is if a calamity were to occur that caused you to lose everything, what would it cost you to replace all these items and get you back on your feet? 

If you still need help deciding if renter’s insurance is right for you, call your insurance agent or call Diane Tait at (904) 388-5494.

Diane Tait owns and operates A&B Insurance.  To find out more about how you can save money on renter’s insurance, go to her site or fill out the form at right.