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Renters Insurance

What is Renters Insurance? Renters insurance protects your personal property against damage or loss, and insures you in case someone is injured while on your property. The premiums for renters insurance average between $15 and $30 per month depending on the location and size of the rental unit and the policyholder's possessions.

To Purchase or Not to Purchase?

As with any insurance policy, you should evaluate the benefit of coverage on an individual basis. Your landlord's coverage only covers damage to the building's structure. However, if you want to protect your personal belongings, you may want to consider buying a renters insurance policy.

In addition to personal belongings, some policies will also cover living expenses if your apartment or home is uninhabitable due to damage. Many people go without this coverage, because they wrongly assume the property owner/landlord has insurance coverage that will protect them against any loss. This is not often the case, landlords typically have a policy for the physical building they own, but not for a renter's personal possessions.

If you live with roommates, each individual renter may need their own renters insurance policy to protect their possessions as some policies only cover one individual renter as opposed to everything in the rental itself.

Basic Options

Most renters insurance policies provide two basic types of coverage: personal property and liability. Personal property coverage pays to repair or replace personal belongings if they are damaged, destroyed, or stolen.
Liability insurance provides coverage against a claim or lawsuit resulting from bodily injury or property damage to others caused by an accident while on the policyholder's property.

Which Type is Right for You?

There are two standard renters insurance policies:

  • The Broad Form covers personal belongings against specific events, such as fire or theft. This is the most commonly purchased renter's policy. Typical coverage under this form includes damage from fire, lightning, explosion, smoke, vandalism, theft and water-related damage from property utilities. This is the most commonly purchased renters policy.
  • The Comprehensive Form provides coverage for a range of events, unless specifically excluded by the policy. Considering the potential amount of coverage, the premiums for this policy may be higher. Location also may be considered when choosing your form. If you live in an area prone to violent storms, such as hurricanes, consider purchasing a comprehensive policy that specifically addresses storm damage.

Additional Coverage

If you have unusually expensive items, such as fine jewelry or an art collection, you may consider adding a rider to provide extra coverage. Your agent can help you determine if an additional rider is needed.

Actual Cash Value vs. Replacement Cost

One important factor to look for when shopping for renters insurance is actual cash value vs. replacement cost coverage. While it may not affect your short-term premiums, it may make a large difference in your claim submission.

Actual cash-value coverage, as the name implies, will reimburse you for the cost of the property at the time of the claim, minus your deductible. It s important to account for depreciation when considering this coverage option. For example, if you lose an audio system that was purchased five years before the claim, you will be reimbursed for the current value of the system. This may result in a lower claim payment than you expect.

Replacement cost coverage, on the other hand, will reimburse the full value of the new audio system after you purchase the new system and submit your receipts. While the up-front cost is greater with replacement cost coverage, you are more likely to receive accurate compensation for your possessions.

Does Everyone Need Renter's Insurance?

It s always a good idea to take precautions to protect yourself and your belongings. If a college student is under 26 years old, enrolled in classes and living in on-campus housing, the student may be covered under his or her parents homeowners or renters insurance policy. However, if a student lives off campus, they may not be covered under their parent's policy for losses or may only be covered for part of possible losses. On average, a dependent is covered for up to 10% of the parent s policy. Double check with your insurance agent regarding the specific provisions of your policy.

Other Points of Interest Regarding Renters Insurance

When a claim is reported, the insurance company will ask the policyholder for proof of purchase for all items reported on the claim. A comprehensive list of possessions, including purchase prices, model numbers and serial numbers, will suffice. It also is a good idea to take photos or video footage of any personal possessions for documentation, making sure it is stored in a secure, off-site location.

When determining how much, if any, renters insurance you should purchase, estimate the value of your personal possessions. This is the amount of insurance you will need to replace the contents of your home if everything were destroyed.

If a college student is living in an off-campus house or apartment with one or several roommates, they may be able to purchase a renters insurance policy together. Some policies automatically extend coverage to any resident of a policyholder s household who fits the definition of a domestic partner. Otherwise, consider carrying separate coverage for each of the adult tenants.

One of the smartest things you can do as a renter is reduce the chances of needing to file a claim altogether by requesting that the property owner install an anti-theft or safety device inside the rental property.

In all cases, it is recommended to reference your current insurance policy or contact your agent when deciding whether or not to purchase renters insurance for a student away at college.

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