Renters Insurance

When disaster strikes, it doesn’t care if you rent or own your home. Renters face the same risks as homeowners. Your landlord or condo association may have insurance, but it only protects the building structure, not your personal items.

Imagine losing all your furniture, clothes and other belongings in a fire or other disaster. Renters insurance is meant to rescue you at these times of disaster. Yet only 37 percents of renters have insurance, according to the Insurance Information Institute.

You may be able to protect all your belongings for less than $200 a year. The average renters insurance premium is $187, according to the latest numbers from the National Association of Insurance.

Renters Insurance Coverage — What Is Covered

There are several types of home and renters insurance policies. A policy called the HO-4 is designed for renters and covers damage from 16 types of perils:

  • Fire or lightning
  • Windstorm or hail
  • Explosion
  • Riot or civil commotion
  • Damage caused by aircraft
  • Damage caused by vehicles
  • Smoke
  • Vandalism or malicious mischief
  • Theft
  • Volcanic eruption
  • Falling objects
  • Weight of ice, snow, or sleet
  • Accidental discharge or overflow of water or steam from within a plumbing, heating, air conditioning, or automatic fire-protective sprinkler system, or from a household appliance
  • Sudden and accidental tearing apart, cracking, burning, or bulging of a steam or hot water heating system, an air conditioning or automatic fire-protective system
  • Freezing of a plumbing, heating, air conditioning or automatic, fire-protective sprinkler system, or of a household appliance
  • Sudden and accidental damage from artificially generated electrical current (does not include loss to a tube, transistor or similar electronic component)

Renters Insurance Coverage — What Isn’t Covered

Just as with home insurance policies, renters insurance won’t cover damage from “earth movement,” which includes earthquakes, mudslides and landslides.

Also typically excluded are:

  • Floods
  • War
  • Nuclear hazard
  • Neglect, meaning your failure to save your property at the time of loss or after.
  • Intentional loss, meaning your intentional destruction of your property.
  • Governmental action, such as seizure of your property.

Actual cash value vs. Replacement cost

  • Knowing what types of problems are covered is a good first step to deciding on a policy. Next, considerhow you want your belongings to be covered: “actual cash value” (ACV) or “replacement cost coverage.”
  • As the name implies, ACV coverage will pay only for what your property was worth at the time it was damaged or stolen. So, if you bought a television five years ago for $500, it would be worth significantly less today. While you’d still need to spend about $500 for a new TV, your insurance company will pay only for what the old one is worth, minus your deductible.
  • Replacement cost coverage, on the other hand, will pay what it actually costs to replace the items you lost (minus the deductible). Replacement cost coverage will cost you more in premiums, but it will also pay out more if you ever need to file a claim. Let your agent know about any particularly valuable items you have. Jewelry antiques and electronics might be covered only up to an amount that won’t pay for their replacement.

Take inventory

To ensure you’re compensated for any belongings you lose from a fire, storm or other catastrophe, you should inventory all of your personal belongings. List each item, its value and serial number when possible. Photograph or videotape each room, including closets, open drawers, storage buildings and your garage. Keep receipts for major items in a fireproof place.

To make things easier, the Insurance Information Institute has free inventory software at www.knowyourstuff.org