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The Reality of Renter's Insurance

The Reality of Renter's Insurance

By Bridget Kulla

June 04, 2008

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.


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