You just got your first apartment or you’re renting a cute little house in a great neighborhood until you save enough money to buy. Although you don’t own the space, the landlord’s home insurance won’t cover any of your stuff should disaster strike. It’s like your mom said, better to be safe than sorry -- a renter’s insurance policy protects your stuff, including that 50-inch TV, from fire, windstorm or, in some cases, theft.
A personal property policy pays to repair or replace personal belongings if they are damaged, destroyed or stolen. It’s important to note that flood and earthquake damage is not generally covered by a renter’s insurance policy. You may want to purchase additional coverage if those events are prevalent in your area. Unusually expensive items, such as your grandmother’s diamond ring or fine art, may require you to purchase additional coverage. Your insurance agent can help you determine if additional coverage is necessary. You can choose from named-perils policies, which only cover property that’s lost or damaged due to specific events listed in the policy, or you can go for an all-risk policy covering every type of loss unless specifically excluded.
Liability insurance provides coverage if someone sues you for bodily injury or property damage that happened at your rental. So if your TV falls off the wall and hits your guest on her head, you won’t face financial ruin if she wins a lawsuit against you. If you are living with other people who are not related to you, know that each person in the home should have his own insurance policy.
Actual Cash Value
If someone steals your TV or it is damaged by one of the covered causes, your renter’s insurance will pay you the actual value of the item at the time you make the claim. Most renters insurance pay for losses based on an actual cash value. Before paying your claim, the insurance company subtracts depreciation from your property’s value. Your television, which you paid $1,600 for 5 years ago, will be assigned a value accounting for wear and tear. The insurance company will pay you that value, minus your deductible.
For a higher premium, you can get replacement cost coverage, which will pay what it would cost you to replace that 50-inch TV. You still have to pay a deductible and be aware of your policy’s dollar limit. If the item that was damaged or stolen has a replacement cost of $1,500 or greater it could be paid based on actual cash value, depending on your policy. This may be one of the items to ask about when you policy shop.
Whatever policy you choose, be sure to take a complete inventory of your personal property including the item’s name, date of purchase, value and serial number. Photographs or videos of the items can be helpful when making your claim. Keep receipts for more expensive items in a fireproof container at a different location or scanned and backed up to an online site. If you are still in college or younger than 26 years old, you could have coverage under your parent’s homeowner's insurance. Those policies generally cover you for 10 percent of the policy’s total personal property limit and 100 percent of the liability limit.
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