Statistics show that renters report a higher rates of property crime, theft, and burglary than people who own their home, and are at a greater risk of losing their personal belongings from vandalism, water damage, fire, smoke, electrical surge, ice, snow, and other perils. Despite the risks, many renters don’t have renters insurance. Recent surveys have shown that nationwide, nearly 60 percent of renters are without insurance.
Renter’s insurance, which is for anyone who rents an apartment, condo, house or other property, typically covers a loss from theft or fire. Most policies also include liability coverage in case you get sued or cause damage to someone else’s property.
The reason most tenants don’t carry renter’s insurance is because they are under the wrong impression that they are automatically covered by the landlord’s insurance. This may be true only if the landlord is shown to be responsible for the loss of your personal possessions. In most cases the landlord’s insurance will only cover damage to the structure of the property.
Even if the landlord is ultimately proved to be responsible for a loss and his insurance company reimburses you for your personal property, you may have to wait many months to be reimbursed. And if you are at fault for the loss along with any damage to the building, you will be personally responsibility for damages to the property and other tenants’ losses.
Likewise, if someone you invited over to your house trips over your cover table and breaks his leg, your landlord’s property insurance won’t protect you from medical bills or a lawsuit. Your landlord may be responsible for a person’s injuries if the accident happens in a common area such as the lobby or stairs. But once your guest crosses your front door, she is your responsibility.
Renter’s insurance protection can be purchased for as little as $150 a year. Think about the money you have spent furnishing the place where you live – a big screen TV, computers, stereo, DVD players, sofas, dinning table, bedroom set, etc. All that stuff adds up to a lot of money – money that you probably don’t have saved up in the bank. The couple of hundred dollars a year in premium for a renter’s insurance policy is well worth the peace of mind that the insurance will bring.
Here are some tips to help you select the best options for your renters insurance:
Know how much coverage you need: You want to buy and pay for enough renter’s insurance to replace everything in your rental in case everything is stolen, damaged or destroyed. The first thing you need is to take inventory of the personal property that you want to insured an get an idea of the value of these items.
You need to be able to account for each and every possession that you own in case you need suffer a loss and need to file a claim. You may want to take pictures or even videotape each room, closets, open drawers, and so on, and back them up with the receipts for all expensive items. This will help you justify your claim against your insurance company when you have a loss.
Keep the inventory of your property in a safe deposit box or any safe place away from the rental.
Shop for Rates: The best place to start shopping around is by contacting an insurance company you already do business with, such as your car insurance carrier, to get renter’s insurance quotes. You may get a discount if you use the same company that provides your auto or other insurance. Use web sites such as Esurance.com, InsWeb.com and Insure.com that will provide renters insurance quotes. There are many insurance companies that offer some form of renters insurance, so it definitely pays to shop around if you want the lowest rate possible.
Assume More Risk for a Lower Rate: Your premium will depend on a number of factors, including where you live, your deductible, and your insurance company. The higher your deductible, the lower your premium. Some financial experts recommend getting a $1,000 deductible. If you install protective devices such as fire detectors, burglar alarms and fire extinguishers, you will be able to reduce your premium.
Know what’s covered: There are many types of renter’s insurance; make sure you get the amount of protection you think you’ll need. Some policies will protect from fire, theft, and flood, while others will limit your payments to certain types of losses. Make sure you know what type of protection you are getting. Most policies cover common losses from fire or theft. Read carefully for what, if any, water damage is covered. Flood insurance and earthquake coverage require separate riders.
Many policies have a limit on jewelry, art and furs. If you have an engagement ring that is worth $5,000 and the policy has a coverage limit of $1,000, you will need to buy a rider for the engagement ring if you want to increase the coverage to $5,000. Does the policy cover for reasonable living expenses if you are unable to live in your home due to a covered loss?
Actual cash value vs. replacement cost: You can buy a policy that either pay actual cash value covers the value of something at the time it was damaged or stolen. Because of depreciation, that value could be very low if you’ve had the property awhile. Replacement cost covers the cost to replace something at today’s value.
Some more expensive policies will pay to replace your belongings, while others will give you the cash value of an item at the time it was destroyed. For example, replacement insurance will pay for a new television, while fair market insurance will give you the value of the television at the time it was destroyed. The former is less expensive.
Under this type of coverage, your belongings are valued after depreciation. In other words, the insurance company will take into consideration the age and condition of the stolen or damaged property. A replacement cost policy will pay you to replace your property with the same or comparable item at the current market price.
Liability insurance: Besides insurance for your personal property, make sure you have liability coverage, which protects you if someone is injured and sues you or if you cause property damage to others, for example, from a fire that started in your unit. If a visitor to your rental home gets hurt and the liability insurance will most likely pay a certain amount medical costs incurred by the injured person – regardless as to who is at fault.
If you have a dog, you may want to seriously consider adding coverage for injuries inflicted by your dog or other animals. This insurance coverage will pay on you behalf compensation for accidents caused by your dog.
If you already have a renter’s insurance policy for your personal property but don’t have liability coverage, any insurance providers will give you the option to add this on to the existing policy without much hassle. You just have to notify the insurance agent and pay the additional premium.
Renters insurance with a roommate: If you are sharing a rental home with a roommate and not a spouse, your roommate should have his or her own renter’s insurance policy. You want to have your own insurance policy to protect yourself in case your roommate moves out abruptly or cancel the policy without telling you.
Accidents do happen due to no fault on your part. Don’t leave your financial future in someone else’s hands. Protect your financial future and buy a renter’s insurance policy.