Do you live in a rented apartment or condo, or rent a single family home? The owner of the property you rent probably has insurance, but that only covers the building itself, not the property you have inside the building. For insurance on your belongings, you need renter’s insurance.
Renter’s insurance is specifically designed to protect people who live in a rented apartment, condo, or house. It covers personal property, and usually includes liability insurance. It may also include coverage for living expenses if your apartment is unlivable.
Renter’s insurance usually covers damage by the following:
* Fire, smoke, or lightning
* Hail or windstorms
* Water damage caused by plumbing problems or automatic sprinkler systems
* Theft, vandalism, or malicious mischief
* Riots or civil commotion
* Explosions, including explosions of heating/air conditioning systems or water heaters
* Damage caused by aircraft or vehicles
* Sudden, accidental damage from artificially caused electrical surges (not including damage to tubes, transistors, or similar electronic equipment)
* Volcanic eruptions
* Falling objects
* The weight of ice, snow, or sleet
* Freezing of plumbing, automatic sprinkler system, heating/air conditioning system, or appliance
Floods, earthquakes, or hurricanes are usually not covered, and require a separate “rider” (add-on policy.) In addition, specific policies may exclude certain coverage included in the list, in a written exclusion clause.
The average value of a single person household in America is $23,000 worth of personal property. In contrast, Americans save an average of $392 a year. How many are likely to have enough in savings to cover a major loss?
Who needs renter’s insurance?
If your apartment burns, and you lose all of your clothing and furniture, can you afford to replace it? Can you afford another apartment, or a hotel, until repairs are completed? If someone breaks in and takes your computer and TV, do you have the money to replace them? If a friend is helping you move the couch and trips, breaking a leg, can you afford to pay for the hospital bill and follow-up care? What if he sues you for lost wages or pain and suffering? Do you have the money to pay him if he wins?
If the answer to any of these questions is, “no,” you need renter’s insurance.
A basic renter’s policy can be purchased for approximately $150 – $300 per year, depending on coverage limits and deductibles. Cost may also be affected by whether you choose a policy that pays you the “actual cash value” of your belongings, or one that pays “replacement value.”
Actual Cash Value policy: pays the depreciated value of your possessions. For example, if a thief steals a computer you paid $1500 for a year ago, and it’s now worth $500, the insurance company will reimburse you the $500.
Replacement Value policy: pays the amount you need to replace the lost items. These policies usually cost a bit more, but if you can afford it, it’s more than worth the difference.