Your landlord has got you covered if your apartment burns down, right? Wrong. You may not think your stuff is worth a lot, but you may change your mind if you are forced to replace everything. Renter’s insurance is an important and inexpensive safeguard against damage to your belongings.
Anyone who rents can purchase renter’s insurance. Even students who live in university housing can protect their property with renter’s insurance. “Don’t rely on the landlord’s insurance, or your parents’ insurance. As someone living independently, you need to protect yourself and your belongings,” says Marc Young, public information officer for the Oklahoma Insurance Department.
What’s Covered?
Your landlord might have insurance for the building, but that will not protect your property if it is damaged or stolen. Renter’s insurance will typically cover your losses in case of:
- Fire or lightning
- Windstorm or hail
- Smoke
- Vandalism or theft
- Plumbing breaks
- Electrical surge damage
Coverage for additional types of damage may also be included, depending on your policy. Floods, earthquakes and hurricanes are not usually covered with renter’s insurance, so you will need to purchase a separate policy.
Liability protection is included in most renter’s policies. This protects you against a lawsuit if someone or their property is damaged on your premises. For example, if a friend is visiting and slips on your floor and breaks their wrist, in most cases you are responsible for their medical costs. Liability insurance will take care of these costs.
If you’re not able to return to your apartment after a disaster due to damage, renter’s insurance will pay for temporary housing or relocation.
Types of Coverage
There are two types of renter’s insurance policies:
- Actual Cash Value (ACV): ACV coverage pays for what your property is worth at the time of the damage. For instance, if your stereo cost $300 five years ago, it will be worth significantly less today. An ACV policy covers the depreciated cost of the stereo today, not the amount that you paid for it.
- Replacement Cost Coverage: This coverage pays for the cost to replace your belongings today, not when they were purchased. There is usually a limit on how much you can receive and the premiums tend to be higher than those for ACV coverage.
Many renter’s policies have limits on valuables like jewelry, art, electronics and other items. Let your insurance agent know about any particularly expensive items. You may need to buy additional insurance, called a rider or a floater, to cover them.
Premiums
The amount of your premium varies depending on: where you live, your deductible, your insurance company, and whether you need additional coverage. You can get a quote online or through your insurance agent to find out how much you’ll pay for insurance.
You may be able to lower your insurance costs by getting a renter’s insurance policy from your auto insurance provider. Discounts may also be available for “protective devices,” like smoke and fire detectors, burglar alarms and fire extinguishers. “It’s important to maintain a good credit history because many insurance companies consider credit history when determining how much to charge you for insurance,” Young says.
Make an Inventory
To ensure that you are compensated for your property if it is lost, make an inventory of all your belongings. If your property is lost or damaged, this documentation will be needed by the police, insurance adjustors and tax purposes. List each item, the year purchased, purchase cost and estimated current value. If possible, record serial numbers and save receipts. Photos and videos of your belongings are also good additions to an inventory. Keep your inventory out of your apartment or in a fireproof place.
Roommates
If you have a roommate, you can either each get your own renter’s insurance policy or get a joint policy. A joint policy will allow each roommate to be covered, but could cause complications if one roommate moves out or property is lost or damaged. “Insurance coverage can become complicated because renter’s insurance is designed for single individuals and traditional families,” Young says. You may want to get an individual policy, but talk to your insurance agent first. Since state laws vary, you are not able to get joint coverage in some states.
For more information about renter’s and other types of insurance, read the Independent Insurance Agents and Brokers of America's online reference The Graduate’s Guide to Insurance.
For information about state insurance laws or regulations, find your state’s insurance department at the National Association of Insurance Commissioners.
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