I’m forever surprised by the fact that many renters don’t carry insurance to protect against the destruction or loss of their personal possessions: While the majority of American homeowners are insured, the Insurance Information Institute recently conducted a survey that showed only about 30 percent of renters had renters insurance!
This means nearly 70 percent of renters are without coverage should fires, thefts or other unfortunate events damage or ruin their possessions. Yet, according to the latest data, the National Association of Insurance Commissioners estimates the average renter’s policy costs between $15 and $30 a month, depending on the location, size and contents of the rented unit. Compared to the amount it would probably cost to replace everything you own if the unexpected happened, that’s a small price to pay for the peace of mind insurance can provide.
Renters are made up of a wide variety of people, from college students living in their first off-campus apartments to retired couples downsizing to a rented condo. And, since many renters aren’t clear on just what renters insurance is all about, I’ve collected some of the most frequently asked—and misunderstood—questions that I regularly answer.
A: A renters insurance policy typically includes a few types of coverage: personal property protection, which helps protect your belongings in case of a covered loss; liability protection, which can help protect you financially in case someone is injured in your home and files a lawsuit; reimbursed living expenses, which helps cover additional costs of staying somewhere else after a covered loss renders your home uninhabitable; and guest medical protection, which can help pay medical expenses for someone injured at your home.
A: No. Landlords typically carry insurance to cover structural damage to the actual building you’re living in, such as your apartment or the house you’re renting, but this type of insurance doesn’t extend to protecting your personal possessions. And, while some landlord insurance protects against limited damages caused by tenants, you could still be held liable for damages in certain circumstances, for example if you caused a fire or plumbing accident. In these situations, renters insurance may help give you the protection you need.
A: You might not think your possessions are worth that much, but when you consider replacing all of the electronics, clothing, furniture and appliances you own, the costs quickly add up. Even a small fire, for example, can easily leave you with a price tag in the thousands of dollars to replace damaged or lost items. In contrast, for approximately the cost of a pair of movie tickets each month, a renter’s insurance policy can give you priceless peace of mind.
A: Liability coverage helps protect you if someone is injured at your home and sues you. Many renters insurance policies include personal liability coverage, but you should check your own policy to make sure what coverage is included. If you’re concerned about the amount of your coverage, check the limits of your particular policy, and discuss with your agent if you feel further coverage is needed.
A: Your computer is one of your personal possessions, so if you have a renters insurance policy with personal property coverage, that protection would likely extend to your computer. But, there are a couple of things to take into account when you’re trying to figure out whether your computer is protected. The first is the limit, or the maximum amount of money your insurance company will pay in the event of a covered loss. If your computer is worth more money than the limit on your policy, you may want to consider purchasing additional coverage.
Another thing to take into consideration is whether your policy offers replacement cost coverage, which will pay enough for you to purchase a new computer of the same kind, or actual cash value, which reimburses you for the amount of money you might reasonably expect to receive if you sold the item today.
After a few questions like the ones above, I see many renters become very interested in protecting themselves and their possessions. Often, they want more information on the subject, and I invariably send them to Renters Insurance Made Simple by Allstate. It’s a free, downloadable guide that’s easy to follow and contains everything from how to read a policy to how to file a claim.
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