Is Renter’s Insurance Worth the Rent?

By Diane Tait

Image courtesy flickr

Recently we shot a YouTube video that dealt with personal auto and renter’s insurance (which you may view below).  So, I thought it would be a good idea to cover the ins and outs of renter’s insurance in this week’s blog.  If you rent a house, condo or apartment, you may assume that everything contained therein is covered by your landlord’s homeowner’s policy.  That assumption could cost you big were your unit to be burglarized, flooded or burnt up in a fire.  Contrary to popular opinion, the only thing that your landlord’s homeowner’s policy covers is the structure and anything like major appliances, rugs and fixtures contained therein that are owned by the landlord.  As far as your personal property and furnishings are concerned, you’re on your own if calamity were to strike and you’re uninsured.   

What does Renter’s Insurance Cover? – Another fallacy is that renter’s insurance only covers possessions, while in actuality it provides several layers of coverage.  More like three policies in one, renter’s coverage is designed to cover you, your belongings and liability issues that may crop up anytime you rent a dwelling.

      1.      Personal Property – Not only will renter’s insurance reimburse you for personal possessions that are damaged or destroyed in your rental property, but it will also help you pay to repair someone else’s personal property were you to inadvertently damage or destroy it.  At least it will up to the limits you selected when you purchased coverage.  That means if your best friend brings his Nikon camera worth $1,400  to your home to show you and your Rottweiler chews it up, you’d be covered minus your deductible.  It would also cover the loss should your friend’s prized possession be stolen from your home while the two of you were eating out.  Better still, the personal property protection you purchased also covers items that are stolen from your vehicle or destroyed in a fire as well. 

      2.      Liability Coverage – If that same friend slipped, fell and broke his wrist while running after your Rottie, your renter’s policy would also cover his medical bills, as well as defending you in court should your buddy decide to take you to court.  Even a basic renter’s policy provides $20,000 in personal property protection and up to $100,000 in liability coverage.  More importantly, should you find yourself being sued by a guest or courier who injures themselves while in your rented home, your insurer will not only pay to defend you, but they will help you find an attorney and will cover all your court costs.  You’re also covered if your child were to throw a baseball through a neighbor’s window.

     

Image courtesy pxfuel

3.      Living Expenses – Here’s another benefit of renter’s insurance that most people are unaware.  Let’s say your dwelling is damaged by a fire or ruined after windblown debris breaks a window to let the rain inside to the point where your rental is rendered uninhabitable.  Without insurance, it would be up to you to find and pay for alternative accommodations until the property was repaired to the point that it was habitable once more.  With renter’s insurance, you’d be covered for hotel expenses and even food up to the limit of your coverage.  That’s a far better alternative to sleeping on your friend’s couch for a month or so.

What isn’t covered? – While personal property protection is fairly liberal with most renter’s policies, that doesn’t mean they cover everything you own.  Expensive items like jewelry, furs, priceless artworks or antiques may require you to purchase additional coverage.  That means if you happen to own a valuable coin collection or a sculpture by Miro, you need to consult your insurance agent to make sure that it is covered.

Are you covered for storm damage? – Living in Florida means we see a lot of named storms, including hurricanes that can cause extensive damage due to water and wind.  They can also spawn lightning strikes and tornadoes that can damage or destroy your property.  Windstorms can turn your yard into a debris field which then needs to be cleared away.  With renter’s insurance, your policy will pay to have debris cleared from around your rental.  Without it, it’s time to break out the chainsaw.

How much coverage do you need? – For around $200 per year, you can acquire a policy that provides $20,000 in property and $100,000 in liability coverage.  However, if your personal property is worth more than $20,000 or you feel that $100,000 in liability coverage is insufficient for your needs, you can dial in more coverage up to $500,000.  What’s even better is that a renter’s policy is much more affordable than a homeowner’s policy since it doesn’t  cover the dwelling, major appliances and fixtures.  You may also adjust your policy’s deductible as you desire.

Image courtesy flickr

Actual Value or Replacement Cost? – Another decision you’ll be asked to make is whether you want your belongings to be covered at their actual value or replacement cost.  The difference is that the actual value of your belongings changes over time.  Sure your 85-inch smart TV may have set you back $1,000, but in a year or so the actual value might only be $200.  Were it to be lost to a lightning strike, you may find yourself watching a 40-incher if you didn’t opt for replacement value. 

Is renter’s insurance worth the rent? – If your landlord told you he or she was increasing the rent by $20 a month, you probably wouldn’t blink at paying up.  When you look at all the coverage you get from a renter’s insurance policy for that same low monthly rate, I think you’ll agree that if anything it’s a bargain.

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