Why You Need Renters Insurance
By Carolyn M. Brown
Whether you rent an apartment, own a condominium or have any rental property, you need insurance to protect your belongings. While your landlord and condo association might have insurance, it only protects the building and not its contents.
US statistics show that that renters experience higher rates of property crime, theft, and burglary than people who own their home. According to Boston-based Homesite Insurance Group, renters are in danger of losing their belongings from vandalism, water damage, fire, smoke, electrical surge, ice, snow, and other perils. Despite the risks, many renters don't have renters insurance.
A consumer survey conducted for the Independent Insurance Agents & Brokers of America (IIABA) found that nearly two-thirds of those living in US rental properties are currently risking severe financial loss by going without renters insurance. A national consumer telephone survey asked 1,000 people living in rental properties whether they had renters insurance: 64.4 percent said "no" and 2.2 percent answered "don't know."
The top reason most people don't think about getting renters insurance is the mistaken notion that the landlord will be held responsible for a loss. But as Doug Culkin, executive vice president of the National Apartment Association, explains, "The landlord's insurance covers the building and the infrastructure of that building, whether it is the elevators, the air conditioning, or the structure itself." Culkin notes that coverage does not extend into the homes of the individual residents and the possessions they maintain in their units.
So if your building burns to the ground, your landlord isn't responsible for replacing the charred contents of your apartment. Likewise, if your house guest trips over your ottoman and fractures his arm, your landlord's insurance on the property won't protect you from liability. Your landlord may be liable for injuries outside of your rental property, common areas such as the lobby or stairs. But once your guest crosses your front door, he or she is your responsibility.
Parents with college-bound children can take some comfort in knowing that students who live on campus are probably covered in terms of their belongings under the college's insurance policy. However, if your kid lives off-campus in an apartment, he or she is probably not covered. You'll want to consider buying renters insurance on his or her behalf.
What about roommates? Even if you're sharing a humble abode with someone else, each person is responsible for getting his or her own policy. You need to get joint renters insurance to protect your personal belongings, especially if your roommate moves out leaving you holding the bag. Animal lovers may want to look into renters policies that specifically protect them as far as their pets are concerned — say, should your lovable pooch happen to bite one of your houseguests.
When you look at the trade-off — paying a small premium for coverage against the cost of replacing what has taken you years to accumulate — renters insurance makes perfect sense. Here are some tips to help you with the process of selecting renters insurance:
Another way renters insurance protects you is in the area of liability — if someone were to slip and fall on your rented property, and then sue you, renters insurance could cover some or all of your legal obligations and help pay for that person's medical bills. Say you live in a zone that is prone to earthquakes or floods, you could get additional coverage to protect against hazards not covered by basic renters policy.
Cash value or replacement cost
Let's say that you bought your 25-inch television set five years ago for $400; it would be worth less in value today. However, it would cost you that much (or more) to buy a new TV. The insurance company would only pay for what the old one was worth, minus your deductible under a cash value policy. With a replacement policy, an insurer would make an advanced payment to you for the used value of the property, minus your deductible, and then reimburse you the actual price you pay when you replace the property.
Convinced renters insurance ensures your peace of mind and your prosperity? The best place to start shopping around is by contacting an insurance company you already do business with, such as your auto insurance carrier.
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