Renters Insurance

Here Today Gone Tomorrow. Who Needs Renter's Insurance?

YOU DO if you rent and have: stereos, cameras, computers, clothing, jewelry, bicycles, televisions or other valuables you can't afford to replace if stolen, damaged or destroyed. A renter’s policy can protect your investments -- but you must be able to choose a policy wisely to be sure that all your possessions are covered, and that you don't purchase too much coverage.

If you rent, your landlord's insurance does NOT cover your personal property; your clothes, stereo, furniture, television, bicycle, jewelry, personal computer, artwork and other items against destruction or loss. Renters insurance, however, gives you both property and liability coverage.

Renters insurance will protect you against losses due to: fire or smoke, vandalism, theft, windstorm, and water damage from plumbing. Renters insurance will also cover you if someone slips and falls in your home or is injured by any of your possessions and then sues. The insurance should cover your responsibility to other people injured at your home or elsewhere, and includes legal defense costs if you are taken to court.

Common Questions

Q. Does renters insurance cover all of my possessions?

A. It depends. Some possessions -- jewelry, computers -- are often subject to a per-category theft limit (for example, some policies have a $5,000 limit for computers). When seeking information on renters policies, ask about the various category limits and how they apply to expensive items you own. You may purchase a floater, which provides additional coverage for specific items not included in your basic policy.

Q. Can I purchase a renters policy with my roommates?

A. If you live in a group house or share an apartment and want to purchase renters insurance, be aware that the regulations vary state to state, and policies vary significantly from company to company. Find out what regulations apply in your state. Then, shop around to find an insurance company that can accommodate your situation. Also, find out whether your policy needs to be updated if you get a new roommate or if all your roommates need to be named under the policy.

Q. Is my bicycle or car covered by renters insurance?

A. Your bike is protected by a standard renters insurance policy. Motor vehicles are not covered. A separate insurance policy is needed to protect your car, van or motorcycle.

How Do You Buy Renters Insurance?

1. Take an Inventory: Before purchasing, make an itemized list of everything you own with price estimates and purchase dates (if possible). Your inventory will help ensure that you purchase the right amount of insurance -- not too much or too little. Also, an inventory will help make filing a claim easier. Make copies of this inventory and keep it in a safe place outside of your home (at work, in a safe-deposit box or friend's house). Take photographs or video your possessions; this can be helpful when filing a claim.

2. Theft Limits: For example, most renters policies have a $1,000 total limit on jewelry that is stolen, a $3,000 - $10,000 limit for computers and $2,500 - $10,000 for silverware or flatware. Policies vary -- so ask. Ask for a list of standard coverage limits so you know whether you'll need to buy a floater which provides additional coverage for some of your items.

3. Cash or Replacement Value: Your policy can insure possessions one of two ways -- for either the cash or the replacement value. Cash value coverage takes into account the age and condition of items at the time of damage or loss. Replacement value pays today's cost of a new item. For instance, if your five-year-old TV is stolen, a cash value policy will pay part of the original purchase price while a replacement policy will pay the current price of a comparable set. Replacement value policies tend to cost more, and there may be other requirements as well.

4. Deductible Options: Find out about the deductible -- your out-of-pocket cost. The lower the deductible, the more the policy will cost you.

5. Seek Discounts. Insurance companies frequently offer discounts to their auto policyholders interested in buying a renters policy from them. You also may be eligible for discounts if your apartment or home has a security system, smoke detectors, or deadbolt locks. Additional discounts may be available depending on your age or whether you are a non-smoker. Policies vary. Examine as many options as possible.

6. Shop Around. Find an insurance agent or insurance company representative with whom you are comfortable. Ask friends or relatives or consult the yellow pages or internet. Call a variety of insurance companies and agents. Ask questions.

 7. Read Your Policy. An insurance policy is a contract between you and your insurance company. Read the policy carefully -- if you have questions or if something is unclear, call your insurance company representative. Don't sign the contract unless you fully understand the company's responsibilities as well as your own. An insurance policy spells out several obligations for both you and the company. For example, the company has a duty to defend the insured renter in court if the renter is sued. On the other hand, you must give the insurer complete, accurate and timely information.

**Information from the Arizona Insurance Information Association**