Just In Case: Renter's Insurance

We were recently chatting with a friend about life as a renter when the topic about renter's insurance came up. It's something we've considered numerous times, especially after seeing local homes get burglarized or burned down in fires. We've gone as far as getting a few rate quotes about a year ago, but never followed up by signing on the dotted line and making it official. We know, we know...we should just do it, since an ounce of precaution now is worth a pound of solutions later.

So what are details about renter's insurance? Below are a few key points about what renter insurance provides and also what is not covered, alongside some tips for starting coverage...

Renter's insurance normally covers three main categories for those residing in an apartment or rented home:

*Liability coverage for visitors within your residence
*Personal possessions
*Additional living expenses, providing housing coverage to live elsewhere while your rental is being repaired.

There are several types of residential insurance policies. The HO-4 policy is designed for renters, while the HO-6 policy is for condo owners. Both HO-4 and HO-6 cover losses to your personal property from 16 types of perils:

* Fire or lightning
* Windstorm or hail
* Explosion
* Riot or civil commotion
* Damage caused by aircraft
* Damage caused by vehicles
* Smoke
* Vandalism or malicious mischief
* Theft
* Volcanic eruption
* Falling objects
* Weight of ice, snow, or sleet
* Accidental discharge or overflow of water or steam from within a plumbing, heating, air conditioning, or automatic fire-protective sprinkler system, or from a household appliance.
* Sudden and accidental tearing apart, cracking, burning, or bulging of a steam or hot water heating system, an air conditioning or automatic fire-protective system.
* Freezing of a plumbing, heating, air conditioning or automatic, fire-protective sprinkler system, or of a household appliance.
* Sudden and accidental damage from artificially generated electrical current (does not include loss to a tube, transistor or similar electronic component)

Note that flood damage and earthquakes are not included in this list, as these are separate policies (we've posted about special California reduced rate earthquake insurance here). You can search for renter's insurance online here, and after answering a survey about the particulars of your location and rental unit, you'll be provided with several quotes. Specific details such as your zipcode, whether your own a dog, which sort of alarms/security systems are installed in your unit, what type of heating system you use, and how close you live to a fire station all determine your rate policy.

One thing to check for is if the insurance company will offer "actual cash value" (ACV) or "replacement cost coverage" for your belongings. ACV coverage will pay only for what your property was worth at the time it was damaged or stolen. So, if you bought a television five years ago for $500, it would be worth significantly less today, and under ACV coverage you'd be receiving a lot less than you'd likely need in the present to replace the item. Replacement cost coverage is pricier, but it seems to be the better choice if you're looking to protect the monetary value of certain items that depreciate quickly (home electronics, computer equipment, sporting goods).

One bit of advice worth following before purchasing renter's insurance is to photograph and/or videotape each room your residence, including all storage spaces, the garage and any additional space that is part of your rental. Best to keep one copy digitally (perhaps a private Flickr file?) and a hard copy in a safe fireproof location.


Related topics from AT:

California Earthquake Authority Reduced Insurance Policy Rates
Top 5 Things Renters Look For?
Getting Evicted: Rent Control in the City of Los Angeles
Renter's Removable Solutions: Gold Stickers
Renter's Removable Solutions: Duct Tape Flooring
Renters Insurance
Good Questions: What To Do After a Fire?

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