Robert Magda: Renters Insurance Helps Cover the Gap

Friday, June 17, 2016

Renters Insurance Helps Cover the Gap

By Barry Bridges

Look around any rented apartment, condominium or house and you’re likely to find the same things you would see in an owner-occupied home - furniture, clothes, electronics, and other belongings. In other words, you’ll see the same items that play an important role in everyday life.

A standard home insurance policy typically provides a homeowner with some protection for these types of belongings, and similar protection is also available to renters. Unfortunately, renters insurance remains a vastly underused resource. Surveys and studies show that less than half of renters in the U.S. have renters insurance.

You may be a young professional in your first loft or a retiree enjoying more coziness and less yardwork. Either way, if you rent, the best way to help protect your valued belongings is renters insurance.

Two kinds of property: the landlord’s and yours

Why is it so important for renters to get protection for their belongings? It's a matter of where the landlord's coverage ends and where your coverage should begin.

Say, for example, that a severe storm tears part of the roof off your apartment building while you’re at work and lets the rain pour in. Just your luck, the hole in the roof is directly above the spot in the kitchen where you keep the coffee maker that brews a perfect cup every time.

You come home, see this dripping disaster and wonder, “Who’s going to pay for this?” Actually, you should rephrase it as a two-part question:

“Who pays for the damage to the building?” If your landlord has adequately insured the property, that coverage could help ensure that you’ll have a sound roof over your head again when repairs are complete.
“Now that the building is squared away, who pays for my coffee maker?” A standard renters policy could help pay to replace your little morning brewmeister, if your policy covers this type of damage.

The reason for turning one question into two is simple. Your landlord's policy typically covers the structure of the building and the appliances. Your belongings, however, are more than likely excluded from his or her coverage.

What do renters need protection from?

A renters policy could provide some of the same safeguards as homeowners insurance, which could help protect your belongings from threats including:

Fire
Smoke
Water
Lightning
Theft
Vandalism
Windstorm
Explosion (yes, you read that right.)

Here’s an important point to remember: As with homeowners insurance, your coverage may be subject to limitations. Your agent can help you understand what items may be covered and what kind of threats may not be applicable.

For example, the scenario above could be viable in the case of a rainstorm, in which the water falls from the sky. Floodwaters, on the other hand, typically aren't covered by standard homeowners or renters policies, and fall under the domain of flood insurance coverage, which is available for purchase through the U.S. government’s FloodSmart program.

The good news is that a renters policy may help protect your property from more common types of water damage, such as damage resulting from a burst pipe.

Protect your wallet along with your stuff

A renters policy could offer a potential safeguard for more than your personal belongings.

You try to be a good host, but some guests just find their way to trouble like a dog finds its way to dropped food. If one of your guests suffers an injury at your rental and tries to hold you responsible, renters insurance could help pay the cost of legal expenses and/or medical treatment.

What if that hypothetical rainstorm not only ruined your coffee maker but also made your apartment unfit to live in? If your rented home becomes uninhabitable because of a covered hazard, you could get help with hotel bills and other living expenses while your landlord handles the repairs.

You may even find that extra protection from such a financial jolt makes renters insurance even more of a reasonable investment. The average cost of renters insurance, with $30,000 of property coverage and $100,000 of liability coverage, is only $12 a month, according to the Independent Insurance Agents and Brokers of America.

Why not own some protection?

So your name appears on a lease instead of a mortgage - so what? Your personal belongings and financial well-being are still worth protecting. Think about getting renters insurance and giving yourself title and deed to some added peace of mind.

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Note: The views and opinions expressed in this article are those of the author and do not necessarily reflect the opinion or position of Zillow.

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