Renters face the same risk as homeowners in cases of disasters striking their home. Your landlord may have insurance, but this protects the building, not your things in it. What would happen to your belongings if:
- There was a fire in your apartment building?
- A burglar stole stuff from your townhouse?
- The mailman slipped and injured himself on your porch?
- There was water damage within the home that you were renting?Without renters insurance, you've got no coverage for personal property loss or damage.
Take inventory
Renters insurance provides protection if your personal property is damaged, stolen, or destroyed. To ensure you are compensated for any belongings you lose from a fire, storm or other catastrophe, you should inventory all of your personal belongings. Take a camera or videotape through each room and document all of your valuable items. Your inventory should list each item, its value, and serial number. It's a good idea to keep receipts for major items in a fireproof place.
What standard policies cover
Make sure you look at your renters policy and understand what you're insured against. This coverage is known as "named peril" coverage.
The named perils in your renters policy may include:
- 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)
Your coverage will also include liability protection, which covers injury to another person on your property. Additionally, your policy will include coverage for medical expenses of your guests that are injured on your property. If necessary, your policy may even pay for your legal defense.
Floods and earthquakes usually are not on the list of covered items. If you live in an area prone to floods or earthquakes, you'll need to buy a separate policy or a rider.
Additional Living Expense
If the property that you are renting becomes unlivable due to a covered catastrophe, your renters insurance will cover your additional living expenses. Generally, that means paying for you to live in a hotel or another property.
Actual cash value (ACV) vs. replacement cost
Actual Cash Value
Actual cash value (ACV) coverage will pay only for what your property was worth at the time it was damaged or stolen. So, if you bought a big screen television three years ago for $1,000, it would be worth significantly less today. While you'd still need to spend about $1,000 for a new TV of similar standards, your insurance company will pay only for what the old one was worth, minus your deductible.
Replacement Cost Coverage
Replacement cost coverage, will pay what it costs to replace the items you lost, minus the deductible. So, if you were buying a similar television in today's market, replacement cost coverage would pay out that price. Replacement cost coverage will cost you more in premiums, but it will also pay out more if you ever need to file a claim. Be sure to let your agent know about all the valuable items you own. Some items, such as, jewelry, antiques and electronics might be covered only up to a fixed amount that won't cover the cost of their replacement.
Protecting your Most Valuable Assets
If you have some items that are unusually expensive, such as a diamond ring, you'll probably want to purchase a separate rider. Without riders for expensive items you can't recover the full loss if it's beyond your policy limit.
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