Renters Insurance: What Is It? What Does It Protect?
By USInsurance.com Staff
When moving into a new apartment many people turn their heads at purchasing insurance for their rental. Why would they? After all, isn’t it the landlord’s job to secure the property, including purchase insurance should something happen. This is partly true. In general, a landlord usually has property and liability insurance; however, this only protects damage to the building’s structure and NOT to your personal items. For a small amount of money, you can protect your belongings with renters insurance. Here are some of the common types of renters insurance policies and what they protect.
What renters insurance covers:
Similar to a homeowner’s insurance policy, renters insurance – categorized as HO-4 and HO-6 – covers personal losses from the following:
1. A guest slipped and was injured in your apartment.
2. A fire and smoke
3. Water damage such as from plumbing or facility air conditioner
4. Vandalism or theft
What are the different types of renters insurance plans?
When working with an insurance agent, present them an inventory of your valuable items. Items of value are considered computers, TVs, your clothing, iPods, etc. Work together to determine what plan is right for you and decide between an actual cash value plan or a replacement cost coverage plan.
The “actual cash value”(ACV) plan will only pay for what your property was worth at the time the items were damaged. If you purchased a computer 10 years ago for $1,000, the insurance agent takes this into account where you will only be compensated for what the computer is worth at the present date. In many instances, this amount will be significantly lower.
The replacement cost coverage plan will award the insurer the actual amount of the computer (regardless if it is 10 years old). This type of insurance coverage comes attached with heftier premiums, but also serves as 100 percent protection should you ever have to report a claim. If you have items that are very expensive (like say, a diamond ring), you should purchase a separate rider. Without riders you won’t be able to recover the total loss of the item if it is out of your replacement cost coverage limit.
Depending on where you reside, some agents only deal with ACV plans; while others only use replacement cost coverage. Check with a reputable agent and be sure you know what type of insurance plan you are looking for.
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