Renter's Insurance

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 The first component and coverage line of a renter’s insurance policy is liability coverage. This covers damages to others related to your property, where you are ruled as the at-fault party. This includes things like accidentally causing a fire, water damage, someone entering your property or apartment and injuring themselves from things like a slip and fall, and more. The liability coverage protects you from unlikely events, but that would be highly financially damaging such as a fire. Most landlords require a minimum of $100,000 in liability coverage, however, you can typically purchase more than this. $100,000 seems like a lot of money, but when involving claims originating from fire, personal injury, and water damage, the cost can quickly rise to the 10s or 100s of thousands of dollars. 

 This coverage line insures all your personal property – things like clothes, furniture, kitchen goods, electronics, etc. – inside the property or stored at a storage unit. There are two types of coverage valuations for this: Actual Cash Value (ACV) and Replacement Cost Value (RCV). ACV insures your personal property for the depreciated value, meaning the cost to purchase used, like items if yours are damaged in an insured claim. RCV insures them for the cost to buy brand new, like items, if yours are damaged. An example would be your TV… You paid $800 for it 4 years ago, but today it would be worth $250 if you were to sell it. ACV would cover the cost of buying a similar used TV for $250, where RCV would cover the cost of purchasing a new $800 television. 

 Loss of use is a coverage that is typically included in the policy that covers expenses that arise from having to temporarily live elsewhere, while your home is repaired, after a covered claim. Generally, this coverage limit is 20%-40% of your personal property insured value (ex: your personal property is insured for $20,000 so at 40% for loss of use, you would have $8,000 in coverage for living expenses). This coverage is used to pay for a hotel, eating out, mileage, etc. – additional costs that you incur while you are unable to live in your home or apartment. 

 Medical payments coverage is a coverage that can be used to pay for small medical claims arising from someone becoming injured on your property, regardless of fault. The primary benefit of this coverage is that it can be used to prevent a larger claim or lawsuit. An example would be someone is injured on your property and goes to the ER to get 2 stitches. You are unsure of whether you are at fault, but you use the medical payments coverage on your renter’s policy to pay the ER bill, and this prevents a larger claim and the involvement of attorneys, saving you, the other party, and the insurance company time, money, and headaches. Additionally, med pay can be used to cover expenses that the liability coverage does not, such as chiropractic and massage therapy. 

 There are several ancillary coverage lines you can add to a renter’s policy, to insure valuable items, expensive electronics, etc. For most renter’s policies, they have a sub limit for things like jewelry, furs, guns, or computers. Generally, this limit is a few thousand dollars. If you need additional coverage for these types of items, you should request a higher coverage limit, schedule them individually (i.e. I have a piece of diamond jewelry which is worth $X,XXX), or purchase a standalone Personal Article Floater for items which exceed the available coverage limits.  Water back-up is another beneficial coverage line. If a pipe bursts in your home or apartment, this is covered by the liability limit. However, if the sewer or sump pump backs up through your plumbing and spills into your home, this is covered under water back-up coverage, which is an optional coverage. Without this coverage, your insurance would not pay for damages to your home and personal property from this type of claim. 

 The deductible is the part of a claim that you pay out of pocket. This is a standard feature, and can also be thought of as “self-insurance,” meaning you personally pay for claims or damages that are below your deductible amount. Generally, you can select the deductible amount you want, with common ones being $250, $500, $1,000 and $2,000. It is important to note that the higher your deductible is, the lower the cost of the policy, but the more money you have to come out of pocket if you have an insured claim.