Renters Insurance 101

There are two questions you can ask of yourself that will determine if you should have Renters Insurance.

Can I afford to replace everything in my home if suddenly it was gone?
Is there a possibility that I could be sued because someone was injured by me while I was skiing (riding my bike, fishing, playing basketball, tennis, or any number of physical activities)?

Chances are that you answered the first one, no! The second may have been, maybe!

The real question is,

“Do I have enough assets that could make it practical for an attorney to take a case against me?”

There is the really big question that a renter should ask, but rarely do renters discuss that with me. They instead seem to be more concerned with someone stealing their stereo equipment or cameras. The answer for you may be that you do not need this insurance because your personal property can be totally loaded in your car within a half and hour, and the equity in your car and the $3,000 in the bank is not going to excite any attorney. If that fits, then I would advise you to wait a while. If you are like most Americans, you will accumulate property and assets.

People who own a home have homeowners insurance coverage for the physical dwelling, as a renter, you need insurance to cover your personal property, such as clothing, furniture or electronic equipment, in the event of loss from fire or theft or other perils.

In addition to sporting accidents, Renter's insurance will also protect you if you are responsible for bodily injury or property damage to others. You become legally liable if someone is a visitor and trips over a rug and breaks a leg. It could happen in a grocery store when you are not paying attention and accidentally hit someone with your shopping cart.

Personal property coverage

While your landlord should have insurance coverage for the building in which you live, you need to be aware that that coverage does not extend to protect your personal possessions. Renters insurance provides protection for your furniture and personal possessions - at home or away from home - against damage from such hazards as fire, lightning, windstorm, hail, explosion, smoke, vandalism, and plumbing leakage. A Renters policy also protects your property against practically every type of theft loss in your apartment or anywhere in the world.

This personal property coverage is also called contents coverage since it insures the contents of your apartment. You determine the value of your property and the Renters premium is based on this amount. We can help you if you have questions as to the amount of personal property coverage that's right for you. Or, you can use Travelers Personal Property Worksheet if you'd like to figure it out on your own.

Optional property coverages

Since each of us enjoys a unique lifestyle, you may require special coverages for your individual needs. The following coverages can be purchased separately:

Contents Replacement Cost: pays full cost to repair or replace most personal property in your apartment with no deduction for depreciation.
Personal Property Floater: provides higher limits and worldwide protection for special property such as jewelry, silverware, fine art, furs, cameras, firearms, musical instruments, and home computers for an extended variety of losses. Appraisal or listing of insured items is often required.

Personal liability protection

Stuff happens...and sometimes it's not always good. In the event that you are sued, your renter's personal liability protection helps to cover the associated legal costs and related damages. Most Renters policies provide $100,000 (minimum) of financial protection against liability claims and lawsuits brought by others for accidental bodily injury or damage to their property:

While in your apartment
Caused by your personal activities, including most sports
Caused by your children or pets.

Liability protection also includes medical payments coverage. For example, companies will pay up to $1,000 per person -- regardless of your legal responsibility -- when an accident involves bodily injury to others. Higher amounts of coverage are available.

Additional living expenses

If you are forced out of your apartment by a covered hazard, the policy pays you up to 20% of the contents coverage for necessary additional living expenses (hotel, meals, laundry, etc.) while your damaged apartment or rented home is being repaired.

Improvements

Many renters spend considerable time and money on alterations or redecorating. Under a Renters policy, you may apply up to 10% of your contents coverage to repair or replace these damaged improvements.

Fire legal liability

This feature protects you if you're held legally responsible for any fire damage to the building in which you live. And this coverage not only protects your home, but also any vacation property you rent.

Credit card and check forgery

Renters insurance automatically provides you with up to $1,000 of coverage (in most states) for losses resulting from forgery or any alteration made in connection with credit cards, automated teller cards, and checks used by you and your family.

Deductibles

A deductible is the amount of loss you agree to assume before your insurance coverage takes over. The higher your deductible, the lower the cost of your policy premium. The deductible applies to property losses only. Liability protection does not require a deductible.