Ian Kata rents a townhouse along with two friends and recently faced a break-in. The burglar got away with between $4,000 and $5,000 worth of items, including a computer.
“My roommates happened to be gone that weekend and when I got home, I discovered the burglary,” he said. “Unfortunately, I didn’t have renter’s insurance after getting a high quote.”
Renters’ insurance is intended to provide protection when disaster or theft arise. These policies cover for you for damage from fire, windstorms, smoke, theft, ice and snow, and accidental water incidents. Renter’s policy does not cover flooding, earthquakes, mudslides or damage from government action like a seizure of property. Even if your landlord or condo association have insurance, it only protects the building structure and not personal belongings.
If you rent a house or apartment, having a policy prevents you from paying to replace stolen or damaged belongings. Deductibles can vary and in the event you file a claim, you may pay between $500 and $1,000. Higher deductibles lower your premium, but increase the amount of a covered loss you have to pay.
“Renter’s insurance covers everything within the four walls of your rental. It also provides you with liability coverage, too, in case someone gets hurt inside of your home,” said Ron Christopher, former owner of Christopher Insurance Agency. “Coverage costs vary from state to state but overall, it is very inexpensive.”
According to National Association of Insurance Commissioners (NAIC), the most expensive state for renter’s insurance is Mississippi, where the average premium is $252. But you likely will be able to protect your belongings for less than $200 a year. According to last year’s NAIC, the average renters’ insurance premium was $187.
“I would estimate that only about 30% of renters actually carry insurance converage,” said Christopher, who worked for Allstate Insurance for 20 years before starting his own firm. “On average, you can probably get about $20,000 in coverage for $85 or $100 a year.”
He’d begin by taking inventory of a renter’s most expensive belonging to better estimate how much coverage the client needed.
“I’d ask about jewelry, watches, furs, TVs and other major appliances they own,” Christopher explained. “And renters receive a 10% to 15% discount when they bundle multiple policies. Clients tend to take advantage of bundling their policies.”
Stephen Yee got his policy from State Farm in 2013 after his friends told him how inexpensive their policies were. At the time he was moving on his own in Hazel Park, which is a Detroit suburb.
“I was looking for a car insurance policy so I ended up bundling my car and renter’s insurance together, said Yee, who purchased a policy after gaining helpful insight from his friends. “My policy was only $10 a month thanks to bundling.”
To be on the safe side and ensure you’re compensated in the event your belongings are lost or damaged, take inventory of all your belongings. List each item, its value and their serial numbers when possible. It’s smart to photograph each room, including closets, drawers, storage buildings and your garage. It’s also helpful to keep receipts for your major items to validate the amount you spent.
“Like other policies, renter’s insurance is something you buy and just hope that nothing happens,” said Christopher. “Then if and when one day you come home and find your rental on fire, you’ll be glad you got a policy.”
If you rent an apartment in a home, for instance, the homeowner’s insurance could allow them to walk away with a check for $100,000 after the fire. Yet you, as the renter, would get nothing to replace you belongings if you didn’t have renter’s coverage, he said.
“You just want to be safe not sorry if your neighbor is carelessly smoking a cigarette that causes a fire and damages your belongings,” Christopher said.
You may find that your renter’s insurance policy states specific dollar limits are certain items. If items have more value, you’ll need to purchase a policy rider to fully cover them. Without this coverage for expensive items, you can’t recover the full loss if it exceeds your policy limit.
After dealing with his loss, Kata said he’s going to rethink renter’s insurance and take a couple other precautions to prevent it from happening again.
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