Renters insurance guide

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When you look for a place to rent, you have a lot on your mind – location, amenities, lifestyle, monthly payment, moving, buying furniture – but renters insurance is probably not high on the list. It should be –many landlords require tenants to carry renters insurance and it is a good idea.

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It’s a relatively inexpensive way to protect your worldly goods, at home and away. Renters insurance doesn’t just protect your possessions – its liability coverage may protect your future earnings as well.

This guide explains how to choose and use renters insurance, how to find the best renters insurance, and how to get the lowest renter insurance rates. Click on any of the links below to be taken directly to that section or scroll down to the page. 


Renters insurance coverage

According to the Insurance Information Institute, only 37 percent of renters buy renters insurance, while 97 percent of homeowners carry homeowners insurance. You, like many tenants, might believe that your belongings are protected by your landlord’s property and liability insurer.Renters insurance 1

You would be wrong.

Renters insurance policies are designed to reimburse policyholders for damages caused by most common threats to tenants – fire, theft, and vandalism, for example. In addition to standard coverage provided by most policies, you can add optional coverage for less-common dangers, or to protect exceptional items. Standard renters insurance provisions include:

Personal property coverage

Standard renters insurance covers theft and a host of other perils. It protects your personal possessions, including furniture, clothing, electronics and household goods, against damage from fire, smoke, explosions, wind, lightning, vandalism, theft, water (excluding floods) and other miscellaneous disasters listed in your policy.

Not only are your belongings covered while in your home, they are typically protected away from home too – for example, when your eccentric best friend throws your laptop out the window of a public bus as a “joke.” 

However, there is fine print involved. Normally, coverage is restricted to some percentage of the total limit for your property at home – 10 percent is an often-cited figure. So if your personal property at home is insured for $20,000, off-premises, your limit may be $2,000.

In addition, you’ll probably have a deductible. If the laptop tossed out by your friend is worth $550, and your deductible is $500, it may not make sense to file a claim.

Personal liability coverage

Just because you don’t have a lot of stuff doesn’t mean you should skip renters insurance. It also covers you if you are sued for causing damage or injury to others, at or away from home. This coverage extends to lawsuits caused by members of your household (family only, not roommates unless they are named in the policy). For example, renters insurance covers you if your child throws a rock through a school window or your dog bites the meter reader.

Other coverage

Property belonging to others that’s damaged, lost or stolen while at your residence is generally covered. Other standard coverage includes reimbursement for additional living expenses if your home becomes unlivable due to a covered event, and medical payments for people injured by something you did at or away from your residence.

Renters insurance for apartments, condos and houses

Homeowners policies differ depending on whether residents share walls with their neighbors (condos and co-ops) or live in single-family residences. But what about renters insurance? Do you need a different policy if you rent a house and a yard?

Nope. “There is no difference in renters insurance for houses, condos, or apartments. There is only one rental form for residential insurance,” says David Melzer at East Insurance Group.  

Renters insurance exclusions

Renters insurance policies don’t cover everything that can happen, or everything you own, but they do take care of the most common mishaps. Here are perils not covered by standard policies:

In addition to exclusions, renters insurance policies also limit coverage for specific categories of possessions – lost or stolen jewelry coverage, for instance, may be capped at $2,500, and protection for computers and electronics may also be subject to limits. Artwork may not be covered at all.

If you have valuable items with no or limited coverage, you’ll have to purchase a special rider or endorsement to protect yourself from these losses. “Scheduled” personal property refers to items with limited coverage under a standard policy; you establish a “schedule,” a list of items and the amounts that will be paid if they are lost or damaged, as an addendum to your policcy.

In addition, most renters insurance policies offer cash value reimbursement. If you want full replacement value, that’s extra.

Finally, if you do any sort of business out of your home – eBay sales, babysitting, etc., consider purchasing additional protection – incidental business liability and business merchandise coverage.

Renters liability

Perhaps the most under-rated benefit of renters insurance is its liability coverage. Even if you don’t have costly possessions, an expensive lawsuit could drain your finances for years. Your liability coverage protects you from lawsuits — both the cost of your legal defense and for judgments or settlements up to your policy limit.

The low end of the liability coverage is about $100,000, and many experts recommend purchasing at least $300,000 in protection. If you have a high income, you might want to extend this coverage with an umbrella policy — $1 million of extra protection costs about $200 to $350 per year.

Your policy also likely provides $1,000 to $5,000 of no-fault medical coverage.  So, if a visitor is injured on your premises, you can submit the medical bills directly to your insurer for payment.

Renters insurance by life stage

Whether you’re a student, young family, established careerist or retiree, renters insurance can protect your belongings and your current and future income. However, varying life stages require that you structure your coverage differently.Renters

For example, a typical student whose belongings consist of extremely-used clothing and a four-year-old laptop has little to lose and is an unlikely target for lawsuits. According to Consumer Reports, there are companies that specialize in renters insurance for students, featuring policies with lower rates, coverage limits and deductibles.

Children in the home increases the risk for accidents, and young families should make sure they have plenty of liability coverage. Unlike coverage for adult-caused incidents, renters insurance for young children includes damage caused intentionally. If little Johnny punches out Billy’s teeth and isn’t even sorry, you’re probably still covered – as long as Johnny’s under 13.  Renters insurance 2

Careerists often have expensive possessions and significant income to protect. When your net worth and income improve rapidly, you should reevaluate your renters insurance coverage every year to make sure your protection keeps pace with your wealth. Once your income reaches a comfortable level, and you’ve achieved significant net worth, you’ll likely want more coverage than most renters insurance can provide – policies usually max out at $300,000. For excess liability, you’ll need an umbrella policy – liability protection that kicks in once your renters or auto insurance protection is exhausted.

Retirees are the group most likely to have acquired costly possessions. If you’ve accumulated expensive furniture, high-end jewelry or unique collections over time, make sure your property is covered with higher limits and applicable special endorsements or riders. In addition, if your net worth is $300,000 or more, it’s time to consider an umbrella policy for excess liability coverage. (Many experts recommend liability coverage of two-to-five times your net worth.)

The chart below illustrates several life stages, and examples of coverage and cost estimates for each to show how your life stage and accumulated wealth plays a role in your coverage and premium. 

Life stages new

  1. Report the incident to your landlord. It’s almost certainly mandated by your policy, and may also be required by state law.
  2. Report the incident, if required, to the police or other authorities. If the damage or loss is the result of illegal activity, such as theft or vandalism, you’ll need to file a police report.
  3. Document damages with video, photos, lists of lost or damaged property, receipts, appraisals or valuations of property. Keep damaged property until a claims adjuster sees it.
  4. Contact your insurer. Most policies give you just 48 to 72 hours to file a claim, so time is of the essence. Have your policy number and a description of the incident and damages when you call.
  5. Complete your claim forms, and submit them so your insurer can start its investigation. The amount of time to get your claim paid depends on the extent of the damages and the complexity of the incident. Some claims may only take a few hours while others can take longer. Your agent should be able to give you an estimated claim processing time.

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