Renters insurance is a type of residential property coverage
specifically designed for people who rent homes or apartments. These
policies are often called "tenant policies.
Should I buy Renters Insurance?
Your landlord's insurance doesn't cover your personal property. Renter's insurance does. Your landlords coverage will take care
of damage to the buildings structure. If you want to protect
your personal belongings, you must buy a renters
insurance policy.
There are two standard renter's insurance policies:
The Broad Form covers personal
belongings and is the
most common type of renters insurance. Typically covering damage from fire, lightning, explosion, smoke, vandalism,
theft and water damage.
The Comprehensive Form provides wider coverage and costs more. Location counts: If you live in an area
prone to violent storms, consider purchasing policy that
specifically addresses storm damage.
How it Works
Renters Insurance pays to repair or replace personal property that is
damaged, destroyed, or stolen. Limits on this coverage vary
but most provide at least $4,000 and up to a million in protection.
The policy may pay living expenses if you're
displaced from your home or apartment, generally limited to 20 percent the amount of personal property coverage.
You would be paid up to this
amount for a reasonable time to repair or to get the property rent ready.
Renters policys can provide liability coverage. If someone
is injured in your home and files a lawsuit, many renters policy can
provide liability coverage and cover legal costs.
Actual Cash Value vs. Replacement Cost
When shopping for renters insurance consider actual cash value vs. replacement cost coverage. It may
not affect your short-term premiums but it may make a large difference in
your claim submission.
Actual cash-value coverage
means the insurance company will subtract depreciation
and wear and tear from the value of your property. Basically, you get what its worth today, not when it was new.
Replacement cost coverage pays
the full cost of replacing your property, minus your deductible. You
can usually add replacement cost but the cost is higher. But you are will be able to go out and replace it.
Additional Riders If you have antiques, jewelry or art, you can add a rider to provide extra
coverage. Your agent can help you here.
Shopping for Insurance
If you decide that you need renters insurance, it pays to shop around.
Rates vary widely, so you should get quotes from several different
companies. When comparing prices, be sure you understand the amount of
coverage different policies provide. But price shouldn't be the only
determining factor. We recommended renters shopping for any insurance
check product check the insurers' complaint records.
We recommend that consumers go to
www.standardandpoors.com and register so that you may view their
financial ratings on most insurance companies. It may be worth a little
more to have a company with a good consumer track record and a proven
ability to pay as determined by the S&P ratings.
Note: A complete inventory of
your property can be helpful if you ever file a claim. If you can take
your inventory with a digital camera keeping all receipts and serial
numbers, this is best. This will help expedite a claim should you ever
need to prove you owned items stolen or damaged. Some companies may
offer a free home inventory software program. Keep one copy on a CD and
store it with other valuable papers in a safe deposit box for safe
keeping.
