Thursday, February 21, 2008

Renter's Insurance

Many people do not own where they live, but many still need insurance protection. While the landlord will have insurance to protect her should the apartment or rental house be lost, her insurance will not protect you from the loss of your personal property or protect you in case you are liable for someone’s loss by a means other than an automobile accident. (Often, students have adequate protection through their parents’ homeowner’s insurance protection that “follows” the student to college. Check with your parents’ insurance company to assure that you have coverage. Do not assume you are covered!)

Renter's insurance protects the insured from the loss of personal property as a result of perils listed on a broad form of coverage. To have proper documentation of your property one should maintain a current inventory of belongings, often with photographs, that is kept in a safe place like a safety deposit box. Broad form coverage includes the most common perils of fire, theft and vandalism, as well as lightening, windstorm or hail, explosion, riot, aircraft, vehicles, smoke, vandalism, theft, breakage of glass, falling objects, weight of ice, snow, sleet, volcanic eruption, sudden and accidental tearing asunder, damages from steam or hot water heating system or of appliances for heating water, accidental discharge, leakage or overflow of water or steam from within plumbing, heating, air-conditioning system or domestic appliance, freezing of plumbing, heating and air-conditioning systems and domestic appliances, sudden and accidental injury from artificially generated currents to electrical appliances, devices, fixtures and wiring. (Note that flood insurance must be purchased separately, if you live in a flood prone area.)

A choice you may have is whether to purchase actual cash value or replacement cost coverage for your property. The former is less expensive but only covers the current, depreciated value of your property, while replacement cost coverage is more expensive but covers the cost of replacement at current prices.

While some could easily live without their personal property, the most important coverage you receive from a renter’s insurance policy is protection in case of a liability lawsuit against you and you lose. While you wouldn’t drive and, in most states, can’t drive without liability insurance on your automobile, many seem willing to ride bikes, skateboards, or engage in other activities where a small, but significant, risk exists that you could hurt someone or damage their property and be found liable. Moreover, if you are responsible, through negligence, for the loss of the building you occupy – like forgetting to turn off the toaster-oven – your landlord’s insurance company has the right to collect their monetary loss from you. Without liability coverage, you could be buying your landlord a new building!

Your next step is to first see if you have adequate coverage through your parents’ policy. If the answer is “no” then shop for coverage from, at least, three companies. You will find that the cost is quite reasonable, typically under $300. While you are shopping for renter’s insurance, include a request for a quote for automobile insurance. Often companies reduce the premium if you have both policies with the same company and it has probably been a while since you shopped for automobile insurance anyway!

See: for more information on insurance and for more information on household record keeping.

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