If you rent a house or an apartment, you
might think you don't need insurance because you don't own
the building. Your landlord has coverage, right? Probably.
But your landlord's insurance only covers the building, not
your belongings. Without insurance of your own, you could be
left with nothing in the event of a fire or burglary. And
what if a friend slips on your bathroom floor and hits his
head on the bathtub? Your landlord's insurance won't pay for
his medical expenses, either.
What is it?
Renters insurance (HO-4) is a special kind of homeowners
insurance. It provides no coverage for the building itself.
Instead, it covers your personal possessions if you rent a
house or apartment and offers a level of liability
What is covered?
Standard renters insurance policies only cover losses which
result from any of 17 "named perils." If your
property is lost or damaged as a result of one of these
perils, your insurance company will compensate you for your
loss. The covered perils are as follows:
- Fire or lightning
- Windstorm or hail
- Riot or civil disturbance
- Vandalism or malicious mischief
- Broken glass
- Volcanic eruption
- Falling objects
- Weight of ice, snow, or sleet
- Accidental discharge or overflow of
- Sudden and accidental tearing apart
- Artificially generated electrical
What is not covered?
It should go without saying that losses caused by any other
event are not covered. However, most renters insurance
policies go a step further, listing specific events which
the policy does not cover. Typical exclusions include:
- Enforcement of building codes and
- Power failure
- Nuclear hazard
- Intentional acts
If you live in an area prone to
earthquakes or flooding, you should consider purchasing a
separate policy to insure your possessions against damage
caused by these hazards.
Replacement cost vs. Actual cash value
These may sound like highly technical terms, but they are
actually very important in determining how much money you
will get if you ever have to file a claim. When you get a
quote you should always make sure you know which type of
coverage is being described.
Actual cash value coverage reimburses you
for only the amount your property was worth when it was
stolen, damaged, or destroyed. This means that if all your
clothes suffer smoke damage in a fire, your insurance
company probably won't pay much more than you could've made
at a garage sale - not the $4,000 you spent over the last
six years to create the perfect wardrobe.
Replacement cost coverage, on the other
hand, reimburses you for the amount it will cost to replace
your property. If you bought a $400 television two years
ago, you'll receive enough money to go out and buy another
television just like the old one. Replacement cost coverage
typically pays significantly more than actual cash value
Like any type of insurance, your renters insurance policy
places a limit on the amount it will pay out. Coverage
levels can typically start somewhere around $15,000 and go
up from there. As you increase your level of coverage, your
premiums will increase as well.
In addition, insurance companies have
per-category limits for certain items such as jewelry,
antiques, computer equipment. If the value of your property
exceeds these limits, you will want to get an appraisal
proving its worth. You can then purchase an additional rider
to cover the full value of your property.
Renters insurance also provides liability coverage. A
typical renters insurance policy covers you for accidents
and injuries that occur in your home, as well as accidents
outside of your home that are caused by you or your
property. (This does not include automobile
accidents.) This liability coverage includes legal defense
costs, if you are taken to court over such an accident.
Additional living expenses
If your house or apartment is unlivable as a result of any
of the 17 named perils, renters insurance will typically
cover your "additional living expenses." That
means that it will pay for you to live somewhere else
(usually in a comparable house or apartment) while your home
is being repaired. The dollar limit on this type of coverage
is stated within the policy. There may also be a time limit
on this type of coverage.
What does it cost?
The cost of renters insurance varies greatly depending on
such factors as where you live, the construction of the
building, your deductible, and how much insurance coverage
you need. But renters insurance is much less expensive than
homeowners insurance. Replacement cost coverage is somewhat
more expensive than actual cash value coverage, but in the
event of a catastrophic loss is always worth the extra
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Please Note: The
information contained in this Web site is provided solely as a source of
general information and resource. It is a not a statement of
contract and coverage may not apply in all areas or circumstances. For a complete
description of coverages, always read the insurance policy, including