Several college students rent a crash pad near campus. Stocked with hand-me-down furnishings, cheap dishes, laptops, and of course, textbooks, this free-from-the-parents living arrangement could be the best years yet for these students. Unfortunately, a tenant in the upper apartment carelessly flicks a cigarette into a trash can-now everything these cash-strapped scholars owned is lost.
This tragic story is repeated to some degree or another every day among renters. Whether you rent a home, duplex, or apartment, you are not exempt from having insurance should the unforeseen strike.
For example, if a rental property that you occupy is destroyed by fire, assuming he/she has homeowners insurance, your landlord will be reimbursed according to the policy limitations. You, however, may very well take a financial loss on all you possessions and valuables that were destroyed.
Fire is just one of many perils that could strike your rental home. That is why a good renters insurance policy is a must for any tenant. Other disasters typically covered by renters insurance include: windstorms, hail, civil unrest, aircraft/vehicle accidents, smoke, vandalism, robbery, structural failure, and most severe weather.
However, the National Association of Insurance Commissioners estimates 33 percent of homeowners are unaware that standard policies do not cover for flood damage. Hurricane Katrina and the thousands of victims denied claims is living proof of this. If you rent in a flood-prone area, considering separate flood insurance, available to both homeowners and renters, is a wise choice. The federal government-backed National Flood Insurance Program draws flood-risk maps and sells policies based on flood risk of a geographical area. See www.floodsmart.gov for more information.
Beyond loss of property, a good renters insurance policy should also cover injury and liability. If you have a party at your rented home, one guest gets a little too tipsy and tumbles down the stairs, you could be held fully liable. This can include court costs, medical bills, and more, and can apply to any accident that occurs on your rented turf. Make sure any renters policy you purchase has specific liability coverages pertaining to accidents, property damage, and personal injury.
Renters policies, like most types of insurance, come in graduated premiums. A more costly policy will get you additional coverage, liability limits, and varying deductibles. Determining how much you need depends on a number of factors, such as: personal property, valuables, natural disasters your area is prone to, and how often you entertain/host visitors at your home.
Don’t make the mistake of assuming your landlord’s insurance policy will cover you as well in the event of a disaster, accident, or other unforeseen circumstance. Take the proactive approach and arm yourself with a good renters insurance policy. Just like auto insurance, life insurance, and health insurance, a good rental policy is something you cannot afford not to have.