Renters Insurance

Renters Insurance differs from home insurance, and if you are a renter, you surely need it. If you are a homeowner you try to get the coverage for your home. If you are a renter, you need to purchase adequate cover for your personal possessions. We buy insurance to reduce risk and to protect those things we value. Purchasing insurance gives you a safety net especially considering the kind of financial setbacks you may face in case of a loss. Insurance makes it possible for us to plan for the future with some peace of mind by reducing our potential losses to a predicable monthly amount.

It is possible to purchase insurance to defray / offset almost any potential risk. Therefore there are as many types of insurance policies for as many circumstances. All policies are subject to the terms and conditions established by the insuring company and the underwriters. It is important to know the provisions and implications of an insurance policy before buying it.

I am a renter. Do I need an insurance policy?

Yes. What applies to homeowners applies to renters too. If catastrophe strikes tomorrow, are you in a position to replace everything you own? Or if you were sued, would you have enough money to pay legal fees and possibly settle the suit? If not, chances are you would benefit from the protection that renters insurance brings.

Renters Insurance: The basics

Renters insurance offers similar basic property covers and protects your personal liability the same way as a homeowners policy.
So, your bookshelf would be insured while you are on vacation, and you would be covered if your dining table was to crash through the wall of your apartment.
In fact, most Renters policies offer you the option of additional living expenses (ALE or loss-of-use coverage) being provided if you are forced to leave your home due to damages caused by fire for instance.

The landlord's insurance policy covers damage to the building and its exteriors and what may be his property. This is not your personal property or liability. So any damage to this and you may be delving deep into your pocket. For instance, if you venture out while the stove is on, and an ensuing fire causes extensive damage to the entire building, you may be held liable to the landlord.
Renters insurance is very affordable. You as the renter are not required to insure the entire building but only your unit, so it can prove pretty inexpensive.

The insurance company calculates your premium by taking into account the value of the property you wish to insure and the risks involved. Contact your insurance agent or company representative to find the best combination of coverage and cost.

How does it work?

In many cases, state laws dictate how losses are to be figured, which means the same insurance company may use different methods in different states. The common methods are:

• Actual Cash Value: The replacement cost of the item minus its reduced value over time. For example, a new television set may cost $500. But if your 7year-old TV set gets damaged in a fire, it might have depreciated 50 percent prior to the damage. Therefore, you would be paid $250 for that set.
• Replacement Coverage: The cost of replacing an item without subtracting or considering the depreciated value, but limited to a maximum dollar amount. Today's cost for a TV set with features similar to the 7-year-old one damaged by fire would determine the amount of compensation. If it still costs $500 today, that would be the replacement coverage. (It’s important to remember that there are limits on this policy and you need to know what your coverage is in such cases too).

While your landlord probably has insurance coverage for the building in which you live, this coverage does not extend to your personal possessions.

Renters insurance protects your personal possessions – when you are at home or away from home. A renters policy protects you against theft, damage from such acts of nature as fire, lightning, windstorm, hail, explosion, smoke, vandalism, and leakages.

There are certain determined financial limits for personal property. This is determined by what insurance companies term "Special Limits." These may vary from state to state and from one insurance company to another. These limits usually are:

• $1,000 on securities, accounts, deeds, evidences of debt, letters of credit, notes (other than bank notes), manuscripts, passports, tickets and stamps
• $1,000 on watercraft, including their trailers, furnishings, equipment and outboard motors
• $ 1,000 on trailers not used for watercraft
• $1,000 for loss by theft of jewellery, watches, furs, precious and semiprecious stones
• $2,000 for loss by theft of firearms
• $2,500 in case of loss due to burglary of items of silver, silver plated , gold, gold plated and pewter

If these limits seem low to you, consult your agent about additional coverage for specific items.

Coverage for precious possessions, antiques

Remember that homeowners and renters insurance facilitate covering your basic personal possessions, not valuable items. You need to buy separate insurance for them. Insurance companies deliberately limit their coverage of expensive possessions so that household premiums are more affordable to everyone. After all, standard homeowners policies are expected to cover the precious artefacts, everybody would end up higher premiums for such items.

While it is also possible to insure your space as a renter, the policy inclusions and exclusions will be different from the other homeowners standard policies. Know the fine print before you take the leap.