Renters' Guide: Renter's Insurance
Renter’s insurance is a form of property insurance that provides coverage for losses to your personal property and losses resulting from liability claims, such as injuries occurring in your rental that aren’t due to a structural problem with the property (that would be the landlord’s responsibility). Many landlords require proof of renter’s insurance since the landlord’s property insurance won’t cover losses to your belongings or certain liability cases. For instance, if the entire building burns down, the landlord’s policy would cover the structure, and your renter’s policy would cover your personal belongings.
A renter’s insurance policy protects against losses to your personal property, including clothes, luggage, computers, furniture and electronics. The policy may also cover the contents of the policyholder’s vehicle and luggage while traveling. A standard HO-4 policy designed for renters covers losses to personal property from perils such as:
- fire or lightning
- windstorm or hail
- riot or civil commotion
- damage caused by aircraft
- damage caused by vehicles
- vandalism or malicious mischief
- volcanic eruption
- falling objects
- weight of ice, snow, or sleet
- accidental discharge or overflow of water or steam from sources including household appliances, plumbing, heating, air conditioning, or fire-protective sprinkler systems
- sudden and accidental cracking or breaking of steam or hot water heating systems, air conditioning or fire-protective sprinkler systems
- freezing of plumbing, heating, air conditioning, fire-protective sprinkler systems or household appliances
- sudden and accidental damage from artificially generated electrical current
Losses resulting from floods and earthquakes aren’t covered in standard policies. A separate policy or rider is required for these perils. In addition, a separate rider might be needed to cover wind damage in areas prone to hurricanes.
If your rental becomes uninhabitable due to one of the covered perils, the policy may cover “additional living expenses,” including the costs associated with living somewhere else temporarily.
Liability coverage is also included in standard renter’s insurance policies. This provides protection if someone is injured while in your rental and pays any court judgments as well as legal expenses, up to the policy limit.
What’s Not Covered
Like other policies, a renter’s insurance policy provides coverage for losses resulting from a covered risk or peril. The covered risks are always specified in the policy (see “What’s Covered” for a list of standard covered risks). Losses resulting from a non-covered risk are not covered by the policy.
Renter’s insurance policies don’t cover losses caused by your own negligence or intentional acts. For example, if you fall asleep with a lit cigarette and cause a fire, the policy most likely will not cover the damages.
Getting a Policy
You can buy renter’s insurance by contacting a reputable insurance company or – better yet – by contacting several to compare policies and prices. You’ll have to complete a separate application for each company. In most cases, the entire application process can be made online. Some companies, however, wish to speak with customers over the phone or even in person.
In general, you’ll have the option to elect replacement cost coverage or actual cash value (ACV) coverage. Replacement cost coverage pays the actual costs to replace damaged or lost items, and ACV pays based on what the item was worth at the time of the loss. For example, if a computer that cost $1,000 two years ago is stolen from your apartment, replacement cost coverage will pay for a new, comparable computer. An ACV policy, on the other hand, will cover the estimated value of the computer, which will likely be much less than it would cost to buy a replacement. The replacement cost coverage policy may cost more in premiums but will generally pay out more if you ever file a claim.
You’ll also be able to select a deductible – the amount of money you’ll be responsible for if you file a claim. In general, the higher the deductible, the lower the premiums. You’ll have to weigh the financial pros and cons to determine the deductible level that works best for you.
To ensure there’s enough insurance to cover all your belongings, you may want to buy a separate rider for valuable items such as jewelry, photography equipment, musical instruments and antiques. (For more, see Renter’s Insurance: A Comprehensive Guide.)Renters' Guide: Trading Rent for Mortgage Payments