When disaster strikes, both property owners and tenants usualluy undergo losses and inconvenience. The property owner is responsible for insurance coverage on his buildings and possessions, but that insurance does not cover the personal possessions of renters or guests within the premises.
Unless legally proven otherwise the landlord’s policy does not cover anything that belongs to the renter. The tenant must have his own renter’s coverage to protect personal possessions. Renter’s insurance is relatively inexpensive, and is based on the value of the tenant’s possessions. Many landlords require proof of renter’s insurance as a condition to rent.
The list of perils for the tenant covered by a standard policy is extensive, but a policy must be explicit, with the understanding that if a peril is not listed, it is not covered. For example, if floods or earthquakes are not listed on your policy, they are in fact not covered and, if you desire this coverage, you will need an additional policy (or rider) that explicitedly enumerates the peril. Also, you might require a separate policy to cover damage from tornadoes and hurricanes. If the plumbing floods, the sprinkler system upchucks, or your computer is hit by a power surge, the damage to your personal property is your lost, not your landlord’s.
If your rented home becomes unlivable because of circumstances covered by your policy, renter’s insurance covers associated expenses, usually including a temporary residence, meals eaten out, etc.
Your policy protects you if someone is injured or their property is damaged while in your rented home. For example, suppose someone slips and falls, breaks his arm, and drops his laptop. You are responsible for all medical and legal expenses, plus any damage to the laptop, but the entire set of circumstances would be covered by renter’s insurance.
Actual cash value, the value of your property at the time of loss, is the most widely accepted method of determining amount of settlement and usually results in the most economical premiums.
Replacement value, covering actual cost of the property, might apply in special circumstances. In this case, you will be paid the cost of a new comparable item, minus the deductible.
A deductible is the amount of money a policyholder has agreed to pay before insurance reimbursement is applied. Higher deductibles usually mean lower premium costs.
All policies have limits of liability above which they will not pay. You must advise the insurance company if you own items of unusual ly high (or undetermined) value, like jewelry, antiques, or electronics. You might need additional coverage.
An inventory of your belongings along with receipts and pictures has tremendous value when disaster strikes. This helps determine the amount of coverage that is reasonable and logical. Free inventory software to guide you through this process is available from the Insurance Information Institute at www.KnowYourStuff.org.
Most insurers offer discounts if smoke and fire detectors, burglar alarms and fire extinguishers are installed.
There are discounts for retired policyholders, those who are over 55 years of age, or if you insure their home and car with the same carrier.
Adequate renter’s insurance is a highly important security resource that should be explored, understood, and put in place if you need the coverage; it only takes one incident to highlight the true value of renter’s insurance.