Renters insurance provides protection against personal property loss and liability. So when something happens to your stuff you have some monetary backup to help you out. And, of course, if something happens to someone else on your property and you find yourself legally responsible, renters insurance will help pay for legal fees and penalties. Remember the landlord’s insurance will usually only cover the building, leaving renters to fend for themselves.
There are seventeen different emergencies covered by renters insurance. The number included on any specific policy varies, but will always include a number of the following:
Fire or Lightning
Windstorm or Hail
Riot or Civil Commotion
Vandalism or Malicious Mischief
Damage by Glass or Safety-Glazing Material that is part of the building
Weight of Ice, Snow, or Sleet
Water-Related Damage from Home Utilities
Electrical Surge Damage
Be aware of the types of emergencies covered by a policy before purchasing. Take into account where you live and which dangers will affect your home. If you live in Los Angles, you probably don’t need to worry about snow build-up on your roof. Also, take note that earthquakes and floods are not on the list. These disasters are not included on a standard policy, and will need to be either added on or obtained separately.
As well as property loss, if the renter’s home is deemed “unlivable” due to extensive damage, renter’s insurance will cover “additional living expenses.” Usually, that takes the form of paying for a similarly priced apartment. The limit is usually at 30-40% of the total policy value, so a $100,000 policy would have a limit between $30,000 and $40,000. The insurance company will usually pay until either the home is rebuilt or another permanent location can be found. Sometimes, however, the insurer will place a 12 month limit, or whatever the insurer decides is “a reasonable length of time.” Always check with the insurer before purchasing a policy.
Look at whether the policy offers “actual cash value” or “replacement cost coverage” for property loss. Actual cash value pays what the property is actually worth at the time. A $500 set of speakers purchased five years ago will have a diminished value, so the policy will pay out less. On the other hand, a replacement cost coverage policy will pay the cost of replacing the property, giving you the original $500. In the later case, the company will usually require you to pay out of pocket for the items and turn in receipts later, but will pay back more then an actual cash value policy.
Always remember to inform your insurance agent of especially expensive possessions. Things like electronics, jewelry, and furniture will usually be covered up to a certain amount, but uncommonly expensive items, such as a diamond ring, may require a separate rider, and probably won’t be covered if the agent is unaware of them beforehand.