Many renters assume that because they don’t own their dwelling, they have nothing at risk. In fact, a 2006 survey by the Insurance Research Council found that only 43 percent of people who rent their dwellings said they had renter’s insurance.
Although renters may not face the same level of risk as homeowners, they still have to protect themselves in the event a disaster strikes. Your landlord probably carries insurance, but this only protects the building – not the contents of your individual apartment or home. Renter’s insurance protects your personal property in case of fire, smoke damage, lightning, vandalism, theft, explosion, windstorm and water damage resulting from burst pipes, sprinkler systems, or malfunctioning heating/cooling systems.
The amount you receive if your belongings are damaged or stolen depends upon whether your policy is for “actual cash value” or “replacement cost.” Actual cash value coverage pays you what your property was worth at the time it was damaged or stolen, minus your deductible. Replacement cost coverage pays what it actually costs to replace what you lost, minus the deductible.
While protecting your personal property is an important reason to carry renter’s insurance, there are other equally important reasons you should never rent an apartment without it. Renter’s insurance provides you with liability protection in the event someone slips and falls while in your apartment. If this happens to you, you are covered up to the policy’s liability limit for an award in a court judgment and for your legal expenses.
In some instances, apartments are rendered uninhabitable because of fire, burst pipes, or another disaster. If the event is a covered peril under your policy, renter’s insurance will cover any additional living expenses you incur until you can move back into your place. However, there are certain limitations. Generally, the maximum amount you can receive is between 30 to 50 percent of the total value of the policy, depending upon your coverage. Your insurer will usually continue to pay while your home is being repaired or rebuilt, or until you find suitable alternative living arrangements. Some insurers cap the amount of time you can receive this benefit at 12 months, while others cover you for what they consider a reasonable length of time.
Finally, renter’s insurance can protect you in the event you cause unintentional damage to your landlord’s property. In most instances of renter-caused damage, the landlord’s insurance company will pay for the repairs, but will seek reimbursement from the liable tenant. In this scenario, your renter’s insurance covers you for the reimbursement amount.
If you are currently renting an apartment and don’t have renter’s insurance, call your agent to discuss purchasing coverage. Your agent can show you how simple things like raising your deductible, or installing smoke detectors and burglar alarms, can help you get great coverage at an affordable rate.