Life event: Moved into a new apartment, condo, or single family home.
Insurance needed: Renter’s insurance.
The necessity:
- Covers your personal items inside and outside the rental dwelling.
- Provides liability coverage in case someone gets injured in your rental.
- Covers temporary accommodations while your rental is being repaired after a peril such as burglary, fire, water damage.
Who does it cover?
The renter’s policy covers you, your spouse, and immediate family members. Dogs are sometimes covered under a policy depending on their breed.
If you are living with roommates, usually two people can be listed per policy. In the case of a claim, reimbursement checks are made out to both individuals on the policy. Thus it is important to be diligent and current when listing roommates on a policy.
The cost
On average, the typical base policy costs $100-$250/ year for a $100,000 coverage policy. It is worthwhile to inquire about the incremental coverage brackets of available renter’s insurance. Many companies offer hundred thousand dollar coverage increases for as little as $50 more than the basic policy.
Often the price of the policy can be even lower when renter’s insurance is bundled with another policy such as auto. And more money can be saved by paying the whole policy in one sum versus monthly payments. Your independent insurance agent will help you find the best price.
What are the odds that I will NEED this?
Majority of people say, “Really, what is the probability that my rental property is going to be burglarized or set on fire.” So they forego this completely affordable insurance.
The thing to remember when living in an apartment or condo, is that you are surrounded by people whose actions you cannot control. Just because you remember to blow out your candles before going to bed, shut off your gas stove and cooktop after preparing dinner, and close your faucets– doesn’t mean that those around you do it.
The number one reason for renter’s insurance claims is water damage. This water damage comes from within your
apartment due to broken toilets, sinks, or appliances, and from adjacent apartments above and alongside you. Water spills quickly ruin rugs, hardwood floors, baseboards, walls with artwork, furniture, and anything else in its path. When you take inventory of your damaged items, and the cost of replacement can quickly add up, you will be glad you have renter’s insurance.
Renter’s insurance coverage typically includes coverage for theft, fire, smoke, explosions, and water damage from burst pipes and overflows. Incidents typically not included in your coverage are damage due to breakage, pest infestation, and flood or excessive rain. In the situation that you are living in a basement or first level rental property and see a potential for flooding, you may want to purchase flood insurance separately.
How much coverage do I need?
Personal Property Coverage
The easiest way to establish your personal property coverage needs is to take an inventory of your belongings. In today’s digital world, this is an easy task outlined in the blog “How to Inventory Your Property.” When completing your inventory, don’t forget to include items in your storage unit and items in your car. Most renter’s insurance policies cover a percentage of your items stored outside the rental property.
Your inventory list will guide your coverage choices. The higher the replacement cost for your items, the more coverage you will want. (Keep your inventory list in a fireproof and secure area where it can safely be accessed for reimbursement uses in time of peril.)
Insurance companies offer item reimbursement in the form of Actual Cash Value (ACV) of the item or Replacement Value (RV) of the item. Actual cash value takes into account that your item has undergone depreciation. So an ACV repayment may not be enough to cover the purchase of a new item. Replacement value will give you the amount of money necessary to purchase a new item. Typically RV policies are usually more expensive than ACV policies. You as a consumer need to decide which policy is best for you.
Another point to consider is that some insurance companies provide the renter with a lump check in case of peril. Other companies reimburse per categories of items, for example electronics, jewelry, etc. Make sure the policy coverage parameters match your item specifications. For example, if your coverage only offers 20% of the policy money for electronics reimbursement, while your personal items consist 65% of electronics, you may need more money to purchase your items again.
Liability Coverage
The liability coverage portion of the policy covers any injuries that guests may experience at your rental. For example, if your cleaning lady slips while cleaning your apartment, you are covered. If a friend trips over a coffee table and sprains his ankle, you are covered. If your dog bites someone, you are covered.
Temporary Accommodations
This part of the policy covers your loss of use of the rental property. It pays your hotel bills, temporary rent payments, and deposits for other places of stay while your rental is repaired. This coverage eases your life as you deal with the damages from peril.
Now you are in the know! Use this information to protect yourself and your rental home.
The above article is meant to give a general overview of insurance policies; exact coverage and terminology could vary by insurance company. Please refer to your policy for exact coverage details and terminology.