What's Covered
Everyone with insurance has a description of his or her insurance package in something called an insurance policy. This policy explains exactly what insurance will and will not cover. As a renter, you only need to worry about the "contents" of your apartment, unlike homeowners insurance where you need coverage for the building in which you live.
However, your belongings aren't the only things that you should protect with insurance; it is wise to have insurance to cover your expenses if something were to happen to a friend in your home. This insurance is called liability. Liability coverage will shield you from claims that may occur if someone is injured in your apartment. Yes, if your neighbor stopped by to visit and got a shock from your lava lamp, he or she could sue you for negligence.
Although insurance policies differ, each policy provides coverage for several causes of loss including fire, lightning, windstorm, theft and liability coverages. Various types of optional coverages may be added to a policy by endorsements to cover additional needs.
Overview of the Renters Insurance Policy
The renters policy
covers against loss by fire, lightning, windstorm, hail, explosion, riot,
civil commotion, aircraft or vehicle damage, smoke, glass breakage, vandalism,
and theft and volcanic eruption. It also provides protection for: damage from
falling objects; weight of ice, snow and sleet; sudden and accidental tearing
apart, cracking, burning or bulging of a steam or hot water heating system
(or appliance for heating water); accidental discharge, leaking or overflow
of water or steam from within a plumbing, heating or air conditioning system
and domestic appliances; freezing of plumbing, heating and air conditioning
systems and domestic appliances; and sudden and accidental injury from artificially
generated currents to electrical appliances, devices, fixtures and wiring
(TV and radio transistors, tubes and similar components not included). It
also provides coverage for additional
living expenses.
Typical Parts of a Renters Policy
Renters do not own the building they live in and do not need to insure it. However,
a renter could be held responsible for damages to the building if they caused
it. Like homeowners, renters need coverage for personal property. This includes
household contents and other personal belongings owned, worn or carried by you
or your family. You are covered whether the loss occurs while you're at home
or away. You can also obtain coverage for the personal property of guests on
your premises. Coverage for animals, such as birds and fish, is not included.
Renters policies include an "Additional Living Expense Allowance" or "Loss of Use" that covers the increase in living expenses made necessary when your apartment cannot be occupied due to damage caused by an insured peril. This covers, for example, motel or meal expenses incurred during the time your residence cannot be occupied. These costs would be those that are above and beyond your normal expenditures for food, utilities and rent - up to the limits stated in your policy.
Liability
All renters insurance policies include liability
coverage. This coverage protects you in the event you are legally responsible
for injury to persons or damage to their property. Liability protection covers
you for injury or damage occurring away from, as well as at, your apartment.
It provides coverage for accidents caused by you, a family member or your
pets. This coverage is subject to certain exclusions, as specified in your
policy.
If a suit is filed, your insurance company covers the cost of your defense whether you are ultimately found legally responsible or not. If you should be found legally responsible, your company will pay up to the liability coverage limits in your policy. Defense costs will not affect your liability coverage limits. Lawsuits between people covered by the same policy are excluded.
Medical Payments to Others
Included under the liability section of your renters policy
is medical payments coverage. This provides coverage for injury to others
when it occurs at your apartment or elsewhere if caused by you, a family member
or pets. It provides coverage whether or not you are legally responsible.
It does not provide coverage for injury to you or family members.
Damage to Property of Others
There is a $500 maximum limit for minor damage accidentally caused by you
or someone in your family to another person's property. Again, you need not
be legally responsible. Damage caused by children under age 13 is covered,
whether accidental or intentional.
Supplementary Coverages
The policy
provides some additional coverage for things, such as the cost to remove damaged
property, or charges made on a stolen credit card.
Special Limits
Certain types of personal property covered by the renters policy
are limited to specific amounts per loss. Special limits and the types of
property limited may vary with individual companies and policies. However,
the following are examples of property that are usually limited:
Money-limited to a total of $200. This could include a coin collection.
Jewelry, watches, precious and semi-precious stones-limited to $1,000 total loss when due to theft.
Guns-limited to $2,000 total loss when due to theft.
Business property-limited to $2,500 while located on the described premises and to $250 while off premises.
Portable cell phones in vehicle or used for business-$1,000 total.
Policy Endorsements
Policy
endorsements change the coverages provided by the policy
under certain conditions. They are available from companies for additional
charges. Endorsements vary between insurance companies, so be sure to check
with your insurance agent or company representative. A few of the common renters
endorsements available follow:
Replacement Cost-Personal Property
Most policies can be changed to include the full cost to repair or replace
personal property that has been lost or damaged without a deduction for wear
or use.
Scheduled Property Endorsement
Many companies offer an endorsement that allows you to itemize valuable belongings,
providing expanded coverage for these "scheduled" items, like jewelry.
Backup of Sewers and Drains
Some insurance companies offer an endorsement that provides coverage for the
backup of sewers and drains.
Home Business
More people are operating businesses in their homes. While the standard renters
policy
excludes or greatly limits coverage for business, several endorsements are
available to add coverage for home-based businesses.
