Renter Insurance Coverages

Renter insurance might cover more than you expect. Learn the coverages and protect yourself from a loss.

If you are liable to someone visiting your place or for property damage elsewhere, renter insurance is your line of defense to protect your assets. See what a renter policy can do for you to keep your financial road smooth in case you go through the unexpected.

Summary
  • Renters, like homeowners, have personal property that can be stolen or destroyed. Renter insurance covers this.
  • Many renters don’t realize they actually have serious personal liability exposures that are only covered through renter insurance.
  • Loss-of-use coverage covers the extra expenses you have in case you are unable to live at your rental.
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Personal property coverage

As a renter, most of your assets (other than your vehicles) are things you own, such as furniture, clothing, appliances, TVs, computers, artwork (with limits), tools, etc. With renter insurance, these possessions are covered while they are inside or outside the rental unit, so for example, a relatively high-value item like a laptop computer will be covered from theft.

Covered Perils:

 

  • Fire and lightning
  • Windstorm and hail
  • Explosions
  • Riots
  • Damage by aircraft
  • Damage by vehicle (not yours)
  • Smoke damage
  • Vandalism
  • Theft
  • Volcanic eruption
  • Falling objects
  • Weight of snow, ice, sleet
  • Damage from your water heater
  • Leaking or overflowing water
  • Freezing of plumbing, heating, air conditioning
  • Short-circuit damage to electrical appliances

Perils Not Covered:

  • Flood
  • Earthquake
  • Tornadoes
  • Accidental loss by you
  • Pests and vermin
  • Damage from your pets
  • Rare or highly-valuable items such as art (see endorsements)

Unusual personal property items that are not covered:

  • High-value jewelry like diamonds, gold, watches and engagement rings
  • High-value artwork
  • High-value wine or liquor
  • Firearms
  • Collectible items such as antiques
  • Pets like fish or birds

Liability and medical expenses

Personal liability coverage reimburses you for legal expenses and settlements if you are charged in a liability lawsuit.

If someone slips and falls in your apartment and needs to go to the ER, the cost will be reimbursed by the renter policy’s Medical Expenses coverage. If someone slips and falls on ice outside your rental property and decides to sue you, the personal liability coverage will be triggered.

The renter policy can also protect you from property damage you are liable for. For example, if a broken pipe in your apartment damages a neighbor’s property, your insurance policy should cover damages.

Loss-of-use coverage

If you “lose” the use of your rental as a result of the covered perils listed on your policy, you will be reimbursed for any “additional living expenses,” you had in order to maintain your normal standard of living while waiting to get back into your apartment or searching for a new one.

If “your normal standard of living” involves cooking at home but now you don’t have access to a kitchen, you can be reimbursed for the expense of eating out more often. If you regularly swam in your apartment’s pool, the insurance company should allow you to find a reasonable place that gives you access to a swimming pool. You can also be reimbursed for extra gas in case your mileage is higher than normal.

How much coverage do you need?

Personal property inventories
Taking an inventory of your personal property is very helpful to get the right amount of coverage. You can make an inventory by making a list, taking photos, and saving receipts (or at least having estimated values). You will also seriously thank yourself that you made one if you end up needing it. Dealing with a major loss to your property is a really tough time to list all your items and their approximate cost. An inventory with photos will make it much easier for you and your insurance company to agree on what was lost in a claim situation.

Personal property with replacement cost
A Replacement Cost valuation of your personal property pays you the amount it would cost to buy your used property new.

Personal property with actual cash value
If your personal property is valued with Actual Cash Value, then you are insured for the depreciated value of all of your property. For example, if you have a five-year-old television that originally cost $1,000 then the insurance company might pay you $500. You will have a hard time replacing all of your property with an Actual Cash Value policy. If your policy is Actual Cash Value, you may be able to add a Replacement Cost endorsement for certain property.

Deciding a liability coverage limit
Ultimately, this is the amount you could lose if someone “sues you for all you’ve got.” This is typically your net worth, plus an estimated loss in earnings, such as your annual salary times five.

Loss of use coverage limit
This is usually a percentage of your personal property limit, so there is not much deciding to do here. A typical loss of use coverage limit might be 40% of your personal property coverage.

Renter insurance endorsements

Scheduled property endorsement
These endorsements add coverage to excluded property or increase the sub limits to property that has a specific maximum amount.

At-home business endorsement
If you make more than $2,000 a year at home, then your renter policy won’t cover the business equipment. An at-home business endorsement would increase the coverage to include this equipment.

Replacement cost endorsement
Most renter policies automatically use Actual Cash Value to value personal property. If you have a certain piece of property, like a home entertainment system or a set of special tools that you want. Replacement Cost to cover, then consider adding a Replacement Cost endorsement for those specific items.

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