Finding renters insurance coverage that pays
If you have renter's coverage and have never filed a claim, you
probably view your policy as a mixed blessing. But if you ever have
need for renter's coverage, you'll probably wish you'd purchased
more or different coverage.
Renter's insurance is very similar to the standard homeowners insurance,
minus the home, of course. You purchase a dollar amount of coverage
based on the value of your belongings. You are typically covered
for windstorm, fire and theft, as well as liability in case someone
slips on the steps of your dwelling and sues you.
You are not covered under your landlord's homeowners policy, nor
are you covered for floods or earthquakes.
"There is a big misconception by people who rent that their
landlord is responsible for everything, and they're not," says
Allison Dean Love, executive director of the South Carolina Insurance
News Service. "The landlord is responsible to have insurance
on the structure and to repair or replace anything wrong with the
structure, but renters also need to have their own renter's insurance
to protect their personal property and also for liability in case
someone slips and falls on their stairs or the dog bites them."
The Insurance Research Council finds that the percentage of renters
who are insured doubled from nearly 25 percent to nearly 50 percent
between 2000 and 2001. An Insurance Agents and Brokers of America
poll found that 46 percent of renters had insurance in 2003.
At least some of the jump may be due to the fact that landlords
are increasingly requiring their renters to have insurance, according
to Janet Portman, author of "Every Tenant's Legal Guide."
"What it does for the landlord is put another deep pocket
in the picture so that in the event of an accident on the property,
in a lawsuit there would be two insurance companies involved rather
than just one," she says.
According to Don Griffin of the Property and Casualty Institute,
renter's insurance typically runs between $300 and $500 for $20,000
to $50,000 in coverage, but can reach as high as $1,000 depending
on location and amount of coverage.
Here's what you need to know to buy a renter's policy that works
Cash value vs. replacement cost
Cash value coverage reimburses you for the value of your property
less depreciation; replacement cost covers what it would cost to buy
a similar item today. The cost to upgrade is about 10 percent, or
$20 on a $200 premium.
Many policies include this or offer it as an upgrade. It covers your
additional housing and living expenses should you have to relocate
Available from your insurance agent only through the National
Flood Insurance Program, flood insurance covers your belongings
in the event of flood. Depending on your location, flood coverage
can run as high or higher than your renter's insurance. There is a
30-day waiting period for new flood policies. Note: There is no replacement-cost
upgrade to flood insurance.
Special or "scheduled" coverage
Valuable items such as jewelry, watches and furs are typically capped
on a standard rental policy (the jewelry cap, for instance, is $1,500).
To insure these items, arrange special or "scheduled" coverage
for 1 percent to 2 percent of the item's value. There is no deductible
on scheduled items and mysterious disappearances are covered with
proof of loss (police report, etc.).
You can increase the liability on your policy for 3 percent to 5 percent
of your premium.
Jay MacDonald is a contributing editor based in