If you are renting your home you might think, “Why do I need insurance?” – since the landlord is responsible for problems with the building. But personal belongings damaged or stolen from the home will not be covered by a landlord or property management company’s insurance policy – leaving you with the loss should anything happen to your possessions. Consider buying renters insurance if you are renting.
TOP CONSIDERATIONS
Know what is covered: If you live in a rented apartment, house, or condominium, your landlord’s insurance doesn’t cover the things you own. In addition to covering your belongings, some policies will also cover your living expenses if you are unable to live in your apartment or home because of an insured loss. Renters insurance may also protect you from lawsuits alleging negligence.
Actual cash value vs. replacement cost: Actual cash-value coverage will reimburse you for the cost of the personal property at the time of the loss, minus depreciation and your deductible. It’s important to account for depreciation when considering this coverage option. For example, if a stereo system was stolen from your apartment five years after you bought it, the policyholder would be reimbursed for the current value of the system.Replacement cost coverage would reimburse the full value of a new stereo system.
Renters policy options: Most policies provide two basic types of coverage: personal property and liability. Personal property coverage pays to repair or replace personal belongings if they are damaged, destroyed, or stolen. Liability insurance provides coverage against a claim or lawsuit resulting from bodily injury or property damage to others caused by an accident while on the policyholder’s property. Renters insurance policies have liability limits, which means the maximum amount the policy covers.
Policies can protect possessions outside of the home: Many policies do not limit protection to home-based situations. For example, items you have insured often are covered if they are stolen by someone who breaks into your car or if they are damaged while not on your property.
HOW TO PROTECT YOURSELF
Weigh the cost vs the benefits: An average policy costs between $15 - $30 a month. Even if you don’t think you own enough valuables to justify the cost, policies cover everything from electronics to clothing to household appliances. Even a minimal number of items could add up to thousands of dollars to replace, which can all be covered in a basic policy.
Evaluate your situation to determine which coverage you need: Determine how much coverage you need and the types of coverage you need. Think about your location. For example, if you live in an area prone to violent storms, such as hurricanes, you might require a policy that specifically addresses storm damage. If you have unusually expensive items, such as fine jewelry or an art collection, these may require you to purchase additional coverage.
Ask about discounts: Many insurers offer a discount on your premium if you have fire or burglar alarms, fire extinguishers, sprinkler systems and/or deadbolts on exterior doors. Some companies also offer discounts if you have more than one policy with them or pay your policy early or for a full policy period. Be sure to ask your agent or insurance company about the discounts they offer.
TOP THREE THINGS TO REMEMBER
1. Your landlord’s insurance will not cover your personal belongings. Only a renters policy will protect your possessions if they are damaged or stolen.
2. Evaluate your needs to determine the coverage you need. If you own expensive items, art, computers, jewelry, or firearms, ask your agent or insurance company if you will need to buy additional coverage.
3. While purchasing actual cash value coverage might save you money initially, it could cost you more in the long run if you need to replace damaged or stolen items.
About the National Association of Insurance Commissioners
As part of our state-based system of insurance regulation in the United States, the National Association of Insurance Commissioners (NAIC) provides expertise, data, and analysis for insurance commissioners to effectively regulate the industry and protect consumers. The U.S. standard-setting organization is governed by the chief insurance regulators from the 50 states, the District of Columbia and five U.S. territories. Through the NAIC, state insurance regulators establish standards and best practices, conduct peer reviews, and coordinate regulatory oversight. NAIC staff supports these efforts and represents the collective views of state regulators domestically and internationally.
