If you rent a house or apartment and think that your landlord is financially responsible if there is a fire, theft or other catastrophe, you’d be wrong!
Your landlord may have insurance to protect the building you are living in, but your landlord’s policy won’t replace your personal possessions or pay for your living expenses while the building is being repaired.
The only way to protect yourself financially, against disasters, is to buy a renter’s insurance policy.
Renter’s insurance, sometimes referred to as tenants insurance, includes three basic types of protection:
- Personal Possessions
- Additional Living Expenses
When it comes to your personal possessions, a standard renter’s insurance policy protects your personal belongings against damage from fire, smoke, lightning, vandalism, theft, explosion, windstorm, water and other disasters listed in the policy. Floods and earthquakes are not covered. Supplemental insurance is available to cover these disasters.
To decide how much insurance to buy, you need to know the value of all your personal possessions; including furniture, clothing, electronics, appliances, kitchen utensils and even towels and bedding. In other words, if your home were to burn, you should have enough insurance to replace all of your possessions.
The easiest way to figure out how much insurance coverage to buy is to create a home inventory (a detailed list of all of your personal possessions, with their estimated value). To help make this task easier, the Insurance Information Institute offers free Web-based software, which you can find at www.knowyourstuff.org. An up-to-date home inventory will also make filing an insurance claim faster and easier.
A standard renter’s insurance policy also provides liability protection against lawsuits for bodily injury or property damage that you or your family members cause to other people. It also pays for damage your pets cause.
So, for example, if your son, daughter or dog accidentally ruins your neighbor’s expensive rug, you’ll be covered. However, if your children or pets destroy your own rug, you will not be covered.
The liability portion of a renter’s policy pays for both the cost of defending you in court and for court awards, up to the limit of the policy. Liability limits generally start at about $100,000.
Some experts recommend that you buy at least$300,000 worth of protection. You can also buy an Umbrella or Excess Liability policy, which provides higher limits and broader coverage. Generally, umbrella policies cost between $200 and $350 per year, for an extra $1 million of liability protection.
Your policy also provides No-fault Medical coverage. So, if a friend or neighbor is injured in your home, you can submit their medical bills directly to your insurance company. You can generally get $1,000 to $5,000 worth of this coverage. It doesn’t, however, pay the medical bills for your own family or your pet.
The third part of the coverage is something that many people don’t know exists. This is called Additional Living Expenses coverage or ALE. This coverage takes effect if your home is destroyed by a disaster that your policy covers and you need to live somewhere else. Your renter’s insurance covers your additional living expenses.
Policies will generally reimburse you the difference between your additional living expenses and your normal living expenses. ALE covers hotel bills, temporary rentals, restaurant meals and other expenses you have incurred while your home is being rebuilt.
More on Renter’s Insurance next time! Until then, be sure to contact your independent insurance agent with any questions about your insurance coverage!