House and apartment renters face the same risks as homeowners if ever a disaster strikes their building. Renters insurance provides financial protection and coverage against the loss or destruction of your possessions if you rent. Usually loss or destruction of possessions (not related to burglary or theft) isn’t covered by your landlord’s insurance policy. The premium on renters insurance is generally inexpensive since renters insurance only covers the value of your belongings and not the physical building in which they are housed.
Renters insurance policies provide “named peril” coverage and states specifically what your house or apartment is insured against. The most common named perils are fire or lightning, smoke, windstorm, accidental discharge of water, theft, vandalism or malicious mischief, weight of ice, snow or sleet, falling objects, explosions and several others. Floods and earthquakes are not on this list, so if you live in an area that is subject to either, you will probably need to buy a separate policy.
Just like homeowners insurance, renters insurance also covers any responsibility you may have to other people injured by you, a family member or pet at your home or elsewhere and will pay legal expensive if you are faced with a lawsuit. Additional living expenses are covered by your renters insurance if you are unable to live in your house or apartment due to fire or another named peril. Also like homeowners insurance policies, the rate of your renters insurance premium will depend on factors such as where you live, your deductible, the insurance company selling you the policy and if you need any additional coverage for special possessions or other circumstances.
Among the most important things to consider is whether the insurance company selling you a renters insurance policy will offer ACV – or “actual case value” – or replacement cost coverage for your possessions. ACV coverage pays only what your possession was worth at the time that it was stolen or damaged. On the other hand, replacement cost coverage pays the actual cost of replacing the item lost, damaged or stolen, minus the deductible. Replacement cost coverage is more expensive in premiums but will pay out more if ever a claim needs to be filed. Antiques, electronic equipment, jewelry or silver may only be covered up to an amount that doesn’t pay for their replacement, in, which case you may want to consider purchasing a floater as a supplement. A floater is a separate policy that covers your valuable for perils or events not included in your regular renters insurance policy.
A good rule of thumb to make sure you will be compensated for possessions lost to fire, storm or other named peril in your renters insurance policy is to make an inventory of all your personal belongings. Videotape or photograph each room, and open drawers, closets, storage containers. Receipts for major items should be kept in a fireproof container, or possibly elsewhere outside your home such as a bank deposit box.
