If you think your landlord’s insurance has you covered, think again
Whether you live in a rented property or have a child renting an apartment at college, renters insurance is a must. It protects you from losses caused by theft, natural disasters or a lawsuit. Yet most tenants don’t buy it.
Data from a 2013 Insurance Information Institute poll revealed that only 35 percent of renters have insurance, while 96 percent of homeowners do.
What’s stopping tenants from purchasing renters insurance? Misconceptions like these:
1. My landlord’s insurance covers my stuff.
Not so. A landlord’s policy doesn’t cover a renter’s personal possessions or liability. It only protects the landlord against structural damage to the property.
2. I don’t need insurance because I don’t think my stuff is that valuable.
Ohio Insurance Institute (OII) reports that most renters have at least $20,000 worth of possessions. Think about if you are burglarized. How much will it cost you to replace everything that was stolen? The costs of a TV, computer and other possessions add up.
Compare that to the average cost of renters insurance in Ohio, about $179 a year, according to the OII. For less than $15 a month, renters insurance is worth it.
3. My apartment complex is densely populated. It’s unlikely I’ll be robbed.
Renters often have a false sense of security, believing they are less likely to be burglarized, but the opposite is true. In 2013, the U.S. Bureau of Justice Statistics said 32.7 percent of 1,000 rented properties were burglarized in 2011, compared to 18.3 percent burglaries of owned properties.
4. Renters insurance only covers theft.
Renters insurance provides far more than just theft protection:
· Liability. If you are sued because someone is injured in your apartment or your pet bites someone, your landlord’s insurance won’t cover the costs. Renters insurance provides liability protection that would cover your legal costs and pay the costs if you are found liable. There are limits, so call us for details.
· Protection from damage from perils. Renters insurance protects personal possessions against damage caused by perils like fire, lightning, smoke, vandalism, electrical surges, windstorms, hail, water damage from utilities or appliances, and more.
· Temporary housing. Most renters policies have additional living expenses (ALE) coverage to pay for temporary housing if you can’t live in your rental due to a disaster. Policies differ in terms of limits and the amount of time coverage lasts.
5. My college student is fully covered by my insurance.
If you have a child in college, note that most homeowners policies limit the amount of insurance for a child not living at home to 10 percent of the total coverage for personal possessions. Some policies provide this coverage only for college-owned housing and will not extend to off-campus properties. Call us if you need help with the details of your policy.
Sources: Ohio Department of Insurance, Ohio Insurance Institute, PIAA of Ohio
What renters insurance does NOT cover
There are exceptions that renters insurance will not cover, such as damage caused by floods or earthquakes. And there are limits on how much is paid when items like jewelry are involved.
Most insurance companies offer endorsements to fill in gaps in basic renters coverage.
What affects the price
The cost of coverage varies based on whether you are covered for actual cash value (replacing the items based on a depreciated value over time) or replacement cost (which covers the cost to replace the items).
While replacement cost coverage is more expensive than actual cash value, it provides more coverage. Premium costs can be reduced by choosing a higher deductible.
Renters insurance doesn’t have to be tricky. Call us, and we’ll explain coverage details and options to make sure you’re protected.