Q: If there’s a disaster and everything is ruined in my apartment, doesn’t my landlord’s insurance cover me?

A: Not usually. Your landlord’s insurance policy doesn’t include your possessions; it only extends to the landlord’s property. Your personal contents as a tenant are your responsibility to insure, which can be accomplished by having renter’s insurance, known as a HO4 policy.

Similar to a homeowner’s policy, some leases even require tenants to obtain a renter’s insurance policy.

Required or not, insurance industry statistics indicate about 70 percent of renters polled don’t have renter’s insurance. What does a tenant get out renters insurance?

According to the Insurance Information Institute, “Renter’s insurance provides financial protection against the loss or destruction of your possession when you rent a house or apartment.”

Seventeen common perils are usually covered, including losses due to theft, vandalism, fire or lightning, smoke damage, water damage, windstorm or hail, and even falling objects or explosions. Note that flood damage is usually not included, and neither are earthquakes. If you’re nervous those perils might be a problem, a separate policy is usually available for an extra premium.

Coverage is similar to homeowner’s insurance in that it also covers your liability for accidental guest injuries What if your cat destroys your neighbor’s coat that was hanging on a chair during a visit? Your pet tarantula bites a visiting kid? Assuming it was accidental, you should be covered for legal expenses if you need defense in court, up to policy limits.

Another plus? Additional living expenses are covered by renter’s insurance. For example, if a fire leaves your place unusable, most policies will reimburse you for the added expense of living elsewhere while repairs are in progress. Naturally, there is a “cap” or limitation to the total payout insurance will provide.

Renter’s insurance does not cover unpaid rent. It also does not cover intentional damage you may have caused, such as breaking a window in a fit of anger.

Surprisingly, renter’s insurance is not terribly expensive, and can be shopped through most insurance carriers. Some companies offer a lower premium if packaged with car insurance as well.

How much insurance should you carry? First do a little thinking about how much you’ll need.

To make that easier, most insurance companies suggest making a list or inventory of your possessions. Several versions are available online, at office supply stores or by calling a local agent.

Don’t think you have that much stuff? Just checking your closet may surprise you. Calculating the cost to replace your wardrobe, including shoes, shirts and accessories, really add up. Look around each and every room to be accurate.

Be sure to splurge on the price of postage and send a copy of the inventory and any photographic backup to a relative or friend in another location.

Next, tally the cost of your inventoried goodies because the big decision below determines the cost of your renter’s insurance. Two types of insurance coverage are available, with one known as “replacement cost” and the other called “actual cash value.”

“Replacement cost” policies cover just what it implies – to reimburse you for the actual cost to replace your belongings here and now. There is no deduction for age of the item. For example, a television you bought two years ago will not be discounted, instead you will be reimbursed for what it costs to go out and replace it today.

Under the “actual cost value” policy, the actual value, due to age or depreciation, is what you’ll be paid if there’s a loss. So that same television would be reimbursed at a reduced price, much like a used car would be in an accident. This type of policy tends to be less expensive than a “replacement cost” policy, for financial coverage reasons.

Let’s not forget about “floaters.” Much like a life preserver, a “floater” keeps specially named items safe from peril, which are covered by this separate insurance policy. Items of high or special value, such as antiques, jewelry, clothes, etc., will cover accidental loss of these items in the event of an accident or covered disaster. What about the cash stashed in your mattress? Actual cash is usually not covered by this or any other type of insurance.

What other factors affect the cost of a renter’s policy? Like all insurance, the selected deductible has an inverse relationship to the price of the policy. In plain English, the higher deductible you select, the lower the premium. The downside is you’ll have to take a greater loss if an accident occurs.

So now that you understand the basics, get to work. Avoid being a statistic of loss, and gain peace of mind as well.


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