Renters Insurance

Renters Insurance

Suppose you came home from work to find your apartment had been broken into and your TV stolen. Or suppose there was a fire in your kitchen. You can’t assume your landlord will pay for the damage.

With renters insurance, you’ll be able to replace what’s damaged or stolen.

Renters insurance covers your possessions against losses from fire or smoke, lightning, vandalism, theft, explosion, windstorm, and water damage from plumbing.

However, renters insurance does not cover floods, earthquakes or routine wear and tear. You can, however, buy separate policies for flood and earthquake damage.

If you’re forced out of your home because of a disaster your additional living expenses will be covered.

Renters insurance pays the reasonable additional costs of temporarily living away from your home if you can't live in it due to a fire, severe storm or other insured disaster. It covers hotel bills, temporary rentals, restaurant meals and other living expenses incurred while your home is being rebuilt. Coverage for additional living expenses differs from company to company.

Renters insurance also covers your responsibility to other people injured at your home or elsewhere by you, a family member or your pet and pays legal defense costs if you are taken to court.

How to Buy Renters Insurance

Renters insurance is a form of homeowners insurance and the same rules apply when you shop for it. Ask your friends, check the Yellow Pages or call your state insurance department. (Phone numbers and Web sites are on the inside back cover of this brochure.) The National Association of Insurance Commissioners (www.naic.org) has information to help you choose an insurer in your state. Also check consumer guides, insurance agents, insurance companies and online insurance quote services. Talk to a number of insurers to get a feeling for the type of service they give. Check the financial stability of the companies you are considering with rating companies such as A.M. Best (www.ambest.com) and Standard & Poor’s (www.standardandpoors.com/ratings) and consult consumer magazines.

Decide How Much Insurance You Need.

Add up the cost of everything you would want to replace if it were damaged or stolen. This could also serve as the basis for an inventory that will make filing a claim easier. For an inventory, also record model numbers, dates and places of purchase. Take photographs or make a video of these items and place a copy of the inventory in safe place away form your home.

Check with an insurance company or agent about the following.

Theft Limits -- Most renters policies have a $2,000 total limit on jewelry that is stolen. Ask for a list of standard coverage limits so you know whether you'll need to get additional coverage for some of your belongings. For expensive jewelry, collections and art work you may want to buy a “floater,” which provides higher limits and broader coverage than those included in your basic policy. There is also no deductible in a floater.

Home businesses -- If you work out of your home you may need a special policy to cover expensive equipment and extra liability coverage if you receive clients in your home. If this is a major source of income, you may also need professional liability and business interruption insurance. Talk to your insurer about getting a business owners policy (BOP).

Cash Value or Replacement Cost -- There are two types of renters policies. Cash value coverage takes into account the age and condition of items at the time of damage or loss. You would be reimbursed for the value of the item minus depreciation. Replacement value pays the cost of buying an item of similar kind or quality today. The price of replacement cost coverage is about 10 percent more but is well worth the extra cost.

Deductibles -- A deductible is your out-of-pocket cost before the insurance pays. The higher the deductible, the less you will pay in premiums. However, make sure you have enough money to cover the deductible, if you have a loss.

Discounts -- Insurance companies frequently offer discounts on renters insurance if you have another policy with them for your car or business. You can also get discounts if your apartment has a security system, smoke detectors, or deadbolt locks. More discounts might be available depending on your age or whether you're a nonsmoker.