Protect Your Stuff When You Rent
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Insurance isn’t something you think about when you’re renting a home, apartment or a college dorm but it should be.
If you’re like many people, you’re thinking that renters insurance is a waste of money.
However, there are ways to think about renters insurance that makes things more productive.
If your belongings have value and they’re damaged or you're robbed, you’re apt to pay more to replace them than you would pay in the monthly insurance.
This is where you have to make intelligent decisions based on the plethora of information I’m providing in this ultimate guide to renters insurance.
Renters insurance is coverage that comes in three choices.
In a nutshell it covers your belongings, your living situation and others in terms of liability.
Liability is typically what throws people off.
If you rent an apartment or house, and you have a visitor that hurts themselves at your place that decides to file a lawsuit you’re covered.
Just keep in mind that you’re covered only up to the amount your policy allows.
This is important to know when choosing a deductible.
Yes, it’s a lot more than just an insurance policy that may replace your belongings in case of theft.
Renters insurance will cover for any loss, damage or liability up to the amount that your plan covers.
The amount of compensation you receive will also depend on the deductible and type of plan.
Actual Cash Value
This is the naturally depreciated value of the items. You’ll have to make an educated choice with this.
One way to help yourself do that is to get your belongings appraised. Typically, appraisals are done with high-ticket items like jewelry.
You can still look on Ebay and other bidding sites that can show you what the cash value is and if the items will rise in value or fall in value.
Let’s look at an example. If you have gold jewelry that you keep in the house, then gold may appreciate enough over time so the cash value may get a decent cash-value back.
Designer clothing depreciates to a point when you wear it and wash or dry clean it but you may get market value if it’s high-fashion. In other words, you could get paid just for the name.
I’m not a jewelry or fashion expert, these are only examples. I want you to understand the concept so that when you actually purchase renters insurance you are choosing it logically.
One thing that’s for sure is that renters insurance is not as cut and dried as homeowners insurance. You don’t own the property you are on and that causes grey areas when something happens in terms of liability.
As I stressed before, renters insurance is more than just protection for your personal belongings.
Let me explain in a simplified way and start with the grey areas. If a guest of yours hurts themselves in your living space you will make a claim on your renters insurance. However, there are stipulations involved in your unique policy.
You must assess several elements:
Who is legally at fault?
This may take some research. Ask the insurance agent you are working with how to find out who is legally at fault when something happens, how to report it and to who.
Why? Because you need documented proof of the incident. Better for you to know as many details about the who and the how from your agent prior to choosing a policy.
This is why I recommend speaking with a live agent and not relying on the online process for any insurance.
There’s just some answers you won’t get in a complete enough form. You also don’t have any recourse.
Where was the incident on the property?
This is a consideration. For example, if they trip going out the door on your welcome mat who pays?
The building owner will have insurance, they have to but it’s not easy to get a clear bead on who pays when the incident started inside your apartment and ended outside.
This is just an example to represent many possible scenarios.
Either way, the fact remains that location needs to be addressed.
Circumstances of the incident
What circumstances surrounded the incident. The point is, every incident is unique.
You don’t have a crystal ball to determine what will happen in the future. The best you can do is get enough coverage based on a lifestyle you know you are apt to keep. In other words, are you a social person?
Are you a homebody that prefers to meet others outside the home? What’s the lifestyle of the people you live with?
Make the best educated guess and choose a policy that makes you comfortable.
Alternative living arrangements are also covered should the place you are in is damaged or uninhabitable.
Again, make sure you get what you need. If you are living somewhere where you are not able to stay with family or friends then this type of policy with enough coverage is recommended.
The type of issues that may arise to cause you to need this policy can be but are not limited to, a fire or storm damage.
So, what other, more mundane things does renters insurance pay for?
First, you must understand that there is a short answer to what it doesn’t cover.
The items listed in the aforementioned coverage list will ONLY be covered if they’re in the realm of your policy.
If the total amount of your losses outweigh your policy limits the excess will not be covered.
So if you lost $5,000 worth of stuff and your policy covers $2000 you are going to be stuck for $3,000.
It also depends on what I stressed at the beginning of the guide when I addressed the cash value or replacement value option.
There’s a rule of thumb to remember.
If your items break due to wear and tear or are deliberately broken then rest assured they won’t be covered.
If they break, are damaged or lost due to vandalism, fire or theft then they may be covered depending on the cause of the issue.
Also, if you move into a place with any kind of rodent or bug infestation including bed bugs, then it’s not going to be covered.
If you move into a place it’s best to make sure it’s treated for bugs and that you know where your bed has come from.
I personally would never accept a mattress as a furnishing.
There can be a lot of things other than bed bugs in a mattress.
See prices and compare policies in under 5 minutes
Low End RI
$100 Per Year
$12,000 Max Replacement Cost
Mid Range RI
High Range RI
$402 Per Year
$1000,000 Property Coverage
$300,000 to $1 Million Liability Range
I created a chart based on national averages according to Insurance.com. Now, let’s look at the breakdown so you get a better picture.
The minimum renters insurance marked in the above chart is for those who have very few possessions.
This policy is popular with college students that live off campus for example. If you needed to raise the property limits you could see a rise in your deductible of around $48.
I don’t suggest you skimp on this type of insurance unless you are really a minimalist with a lot of inexpensive possessions.
This is what I recommend for anyone that is not living singularly. It’s only $402 per year.
If you can pay it up front, do so.
It’s maximum coverage and you have nothing to think of further.
Split it with your spouse or partner and get all that you can.
Now, here’s a way to look at this that will make the comparison clearer and simpler.
Find out what coverage will satisfy all the people in your household.
If you don’t fall into the first group of a college student or a single person and you have a family with you then mid-range and up may be the right choice for you.
Sit down and take stock in your situation and find out if your belongings total more than what the minimum renters insurance would cover.
Also, list anything that is big-ticket like jewelry, furs and the like. You may want an endorsement for these things and a larger renters insurance plan.
Mid range renters insurance will run between $120 to $190 and meet most of the needs of the multiple family household.
It’s typical that the renter will increase the deductible to $1,0000 and bump up the property coverage and get the endorsement for the high-ticket items.
I’ll explain that a bit more after I cover the higher renter insurance next.
Just keep in mind though that though the monthly payment will be less if you raise the deductible you still have to pay that $1,000 out-of-pocket.
Make sure what you own is worth more than the deductible for any insurance policy.
These may or may not be worth it. Make sure it is before you invest.
These riders are scheduled which means you have to have a deductible for each item. Typically it will cover one percent of the value of the item.
Ask yourself if you can afford to or want to pay for a deductible of up to $1,000 for one item because that’s what it may be.
If it is a big diamond ring or if you have a large jewelry collection it may be worth it.
Typically, a regular renters insurance policies will cover these items but, only up to $1,500.
Very simply, you must strategize. Take the consideration mentioned in the previous section. Know what your stuff is worth.
The policy you choose will either carry a cash value or replacement value. I touched on that before.
Your insurance company will agree with you mutually on the actual cash value of your items. Then you can choose to get a policy that will pay out the cash value or the replacement value.
There are pros and cons to both.
The cash value is the current cash value at the time you lose the item. So, depreciation is the key here to exactly how much you get.
When you choose the replacement value, it will replace the item for you. This means that you don’t have to take far less than what you paid for the item to the point that it’s not worth taking the money.
Technically, you should be able to get renters insurance in 30 minutes.
However, I want you to do your due diligence to make sure everything is right before you hit submit so to speak.
The information you need is below. There are explanations for the information that’s important to know.
Your Physical Address
Type of residence meaning home, duplex, condo, apartment etc.
Damage Inventory: In an apartment or condo the rental office typically has a checklist so you can claim damages that were already there. This is kept on record in the office for comparison when you move out for the purpose of refunding your deposit or not. The same information is needed for the insurance company. I suggest a list and pictures both for you to keep and to submit to them.
How many pets you have.
Who else lives with you? This is also one worth expounding upon. If you have a roommate or someone that could cause damage or even theft they need to know about that. Insurance companies aren’t there to just hand you money. They will look for reasons, it’s their business. If you have someone in the dwelling that may bring strangers into the home that, to some insurers may heighten the risk factor. It may even affect your deductible.
If there is a fire alarm, smoke detector, or burglar alarm. You may get a break if you have safety and security equipment installed. This is the same consideration for insuring an automobile; it’s the same concept.
How much your valuables are worth. This is your professional appraisals you received. The insurance company will agree to a cash value on your items with you.
Many people still believe that the landlord’s property insurance will save them when disaster strikes.
According to this article in Forbes The most important point in a nutshell was to Remember that fire, smoke, water damage, windstorms, lightning, theft and vandalism may not be on their radar.
It also depends on the fine details of the occurrence.Damages you incur from vandalism, fire or theft to your personal belongings.
However, there are things your belongings are not protected from.
For instance, all water damage is not created equal. If you have damaged clothing from a leak it may cover it depending on the policy. If you have a flood, it won’t.
Separate flood insurance has to be purchased.
According to a survey done by Nationwide Insurance that renters between the ages of 23 and 35 lacked renters insurance coverage. The percentage was at 56% of that age group.
This is a bit long but it’s important that each step is followed carefully;
Report the loss or damage to the insurance company and the police if need be. This is done in the case of vandalism. Also report it to your landlord immediately. In most states it’s mandatory that you do so. The landlord may legally have to repair any broken doors, windows or other fixtures that were broken or damaged. If you do not make a police report in the case of theft then the claim won’t be valid, it’s typically required by law.
Secure your property immediately. Make sure the locks are changed and any entrance ways are safe and secure. If you aren’t able to stay on the premises while the claim is being processed you must find alternative living quarters. Your renters insurance may cover that depending on the plan you chose.
Contact the Insurance company. Have your policy number a valid phone number where you can be easily reached and all of the details on what happened and what was damaged or stolen. Have the police report handy; they'll want information from that too.
Whatever you do, don't wait. Insurance companies are very strict about timing of a claim. Same for the police report. 24-48 hours should be enough of a window to take action
Document all your damage with images and written description. DO NOT throw away any of your damaged items. The insurance adjuster will come and do their job but this will only be for items of higher value. For items of lower value, the insurance company will advise you later.
Thoroughly complete the claim form. This process is the same as the aforementioned. You must have the police report and proof of damage. It’s also a good idea to have receipts and any other supporting documentation of your goods.
There may be several reasons for your claim to be denied. I’ll highlight the most common ones and explain each in brief.
Deductible is higher than the damages
This means what you pay out of pocket before the insurance kicks in is higher than the damage cost. In this case, you’re stuck with it.
Disaster and loss is not covered
This means acts of God, floods, business supplies. If you work from home, you need to have extra coverage for that specifically.
You caused the damage intentionally to get a claim.
This is a no brainer. Don’t do it. It’s criminal if you’re caught, don’t do it.
Your Landlord is responsible for the damages.
Make sure you know when the line is crossed into the landlord domain. This should be clearly outlined in some way to you by your rental agent. Don’t be afraid to ask questions.
This is an interesting one and it’s good news. Did you know that your renters insurance covers you worldwide.
The coverage isn’t high. It’s only 10% of the total coverage of personal property.
You remedy this by raising your coverage limit or conversely, you can always purchase additional coverage from the storage company.
Yes. Here’s why. If you live on campus in a dorm room your parents may be able to cover you on their policy.
If you live off campus, you may want to get a policy of your own.
You could technically. However, you don’t get any benefit from them.
There is still a deductible and you’ll have to pay both deductibles to get anything. It’s clearly not worth it.
To put things simply; renters insurance is only covering the contents of your apartment or rented space.
Homeowners insurance will cover the structure as well.
Many people get these two gelled. They are basically the same thing but they aren’t in terms of coverage.
Anyone who rents a space to live and does not own the structure that they live in.
Don't give into the hype: Commercials are there to hook you. Don’t decide without shopping around and getting multiple quotes. It’s always good to speak to a live agent instead of filling out an online form. You can get your questions answered and negotiate a rate.
Ask about what discounts are available: Ask about what discounts are available.
There are some common ones here:
Bundle other insurances together.
Age discounts over a certain age
Clean driving record
Pay the premium upfront
Go paperless for the bill
Get your car equipped with security and safety features. Alarms and anti lock brakes and the like.
Your organizations may have discounts
Watch your credit: You will get judged on your credit and it’s legal. There are only 3 states that this is not allowable--Hawaii--California--Massachusetts.
There’s a lot of information concerning something as simple as renters insurance. I’ve taken the time to explain the hidden elements that could cost you more money and loss than you deserve.
Remember to ask questions and take your time filling out your forms and enjoy your peace of mind in your new place.
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