The Amount of Coverage for Renter's Insurance
A 2008 Allstate Insurance survey found that nearly half of the 87 million renters in the U.S. don't have renters insurance. Many of those renters may not realize that their landlord's insurance doesn't cover their belongings, how valuable that coverage can be in the event of damage or theft, or how easy it is to compare and buy the right coverage. While the exact amount of coverage for you will depend on your possessions and risks or liabilities, learning more about what renter's insurance covers will help you make an informed decision to protect your property.
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Are You Covered?
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Landlords' homeowner's insurance covers damage to their property and claims against them for negligence or personal injury, like slips and falls on uneven stairs. It doesn't cover renters' property that may be lost in theft, fire or a natural disaster. Take a moment to think about how much it would cost to replace everything in your home and you may find that renters' insurance coverage that can cost less than a dollar a day may seem a small price to pay should disaster strike.
Loss of Personal Property and Loss of Use
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Loss of personal property coverage in renter's insurance protects anything in your home that could be taken with you when you move out. "All peril" policies cover only the risks specifically named, while "all risk" policies cover all risks except the ones named. Another important difference to look for in policies is whether they are "cash value," which only covers the value of your property at the time it was lost, or "replacement cost", which covers the cost of replacing your property regardless of its value at the time it was lost. Just as it sounds, loss of use coverage pays for your housing and living costs if you have to relocate because of damage to your home.
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Liability Coverage
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Renters often forget that like a landlord's homeowner's insurance, renter's insurance includes liability coverage that covers claims against the renter for negligence, personal injury or damage on your rental property. This can include paying to repair damages to your downstairs neighbor's apartment caused by your overflowing toilet or paying for your legal defense if the neighbor sues you. Some policies even cover liabilities outside of your home.
Documenting Your Belongings and Calculating Coverage
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The Insurance Information Institute recommends taking photographs or video of all of your belongings and using it to make a list including the make, model, price paid, purchase date and how much it would cost to replace in order to calculate how much coverage you'll purchase. The institute also suggests keeping the list and photo or video with a copy of your insurance policy in a place that will be safe if your home suffers damage. They've even developed a free online inventory tool available at www.knowyourstuff.org.
Comparing Policies
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Policies can offer similar coverage but still differ from one insurer to another, for example, in when and how money from a claim is disbursed or how long you can use your loss of use coverage. You can also compare policies by their insurers, checking their financial stability through rankings from companies like A.M. Best to make sure they'll be solvent if you should need them or if your state's insurance regulation office has records of complaints against them.
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