By Catherine Powell
|Image courtesy Pixabay|
As I write this, I'm streaming a video showing the devastation that Typhoon Doksuri unleashed on China recently. Not only was the devastation brought on by torrential rain and winds that topped 135 MPH horrific, but the flooding that ensued on its heels washed away cars, houses, roads, and several bridges. Since I've weathered my share of hurricanes over the years in Florida, I'm grateful that I'm covered by insurance should a named storm unleash its fury on my home or business. This way I'll be able to quickly recover should the worst come to worst. However, weather gone wild made me think about those who choose to rent as opposed to owning their home. Sure, the landlord will get compensated for any storm damage that occurs, but as a renter you'd be out of luck if any of your possessions were damaged or destroyed by the wrath of Mother Nature. Since you can't bill the landlord for damage or loss of your property, here's why you really should consider looking into renter's insurance.
Renter's insurance is remarkably similar to homeowner's insurance. With the exception of structural damage, it protects policyholders from a number of covered perils, including:
Personal property protection for such things as clothing, electronics, furniture, and jewelry is covered for loss or theft up to the limits of the policy. That means if a storm or a broken pipe shorts out your 70-inch UHD TV, it's a covered peril. The same applies if a wind-driven branch shatters the kitchen window only to destroy your microwave oven. Many times after a named storm, the power goes out for an extended period. If the food in your freezer were to be ruined, a renter's policy will compensate you for the loss. The same goes for damage caused by fire or theft. The only exceptions are losses due to sinkholes, earthquakes, or floods. For the latter you'd need flood insurance content coverage in addition to a renter's policy, unless you live in a high-rise apartment building too high for flood waters to reach.
Lightning strikes directly on a rental property is covered peril, while damage due to a power surge is not. Since a bolt from the blue that strikes near a rental property can cause a power surge, the next time you expect a thunderstorm, make sure you unplug all your expensive electronics. Unless you can show an adjuster a burned hole or scorch mark that occurred to the exterior of your rental unit, you'll be hard pressed to prove a direct hit.
Smoke damage can ruin clothing, furnishings, carpets, and drapes. It can sometimes occur due to a fire in your unit, or it may waft in from a fire in a unit near your dwelling. Fire can be caused by a lightning strike. If you have renter's insurance, smoke damage is a covered claim. If you don't, you'll have to replace any smoke damaged items in your rental out-of-pocket.
Vandalism can occur to personal property contained in your unit. If you should evacuate your residence during a storm only to return home to discover that vandals have trashed your dwelling, this is a covered claim under most renter's policies.
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Loss of use coverage compensates you for living expenses including hotel stays, meals, and more should your rental unit be deemed uninhabitable after a storm up to the limit stated on your policy. Since natural disasters, fires, and water can sometimes damage a dwelling to the point that a renter is forced to seek alternate accommodations, loss of use coverage could save you thousands of dollars in living expenses that you'd otherwise have to pay out-of-pocket. Depending on the policy, loss of use can be either a flat amount between $3,000-$5,000, or it may be calculated based on a percentage of the value of your personal property, which could be worth significantly more. Either way, read that portion of your policy to see what is covered, keep all your receipts, and check with your insurer to make sure the place you intend to stay is approved.
Personal liability coverage helps pay for injuries sustained by your guests or damage done to their property, provided the damage wasn't intentional. If you choose to shelter someone other than your family during a hurricane and the guest should get injured, you could wind up being sued. If that happens, your renter's policy can include coverage not only for your guest's medical bills, it could also pay for legal fees incurred by you to defend yourself in court.
How much coverage do you need? That depends on how much stuff you have, which usually entails taking a quick inventory of your possessions. This needs to include the value and age of the items, as well as their cost to replace them. You'll also need to consider whether some of your possessions are more valuable than others, such as jewelry, art, musical instruments, antiques, or collectibles you currently own. Standard renter's policy limits may require you to acquire additional coverage for valuables over and above the stipulated personal property limits.
Actual cash value or replacement cost? There are two types of personal property coverage available: cash value or replacement cost. The difference between the two can be substantial since actual cash value policies take depreciation into consideration when determining how much to pay you for items that were destroyed or stolen. Replacement cost policies are a bit more expensive, but they pay you what it takes to replace the lost item at current market value.
|Image courtesy Pixabay|
How much does it cost? That depends on the type of coverage you select, the amount of coverage you choose, and the place you happen to live. That's right, your geographic location counts when it comes to determining cost. While the average cost for $30,000 coverage in Alaska is only $73 per year, the same policy in Florida averages $184 per year, and one in Connecticut can set you back an average of $240 according to Forbes Advisor. Still, that's a far cry from what you'd have to shell out for a homeowner's policy. Why is it so much cheaper? Unlike a homeowner, a renter doesn't have to worry about insuring the structure inside which they live. Still, you'd be wise to obtain at least three quotes from competing insurance companies before you sign on the dotted line. The other thing that can make a big difference in the cost is the deductible you choose.
What other factors determine the price you pay for renter's insurance? Just like other forms of insurance, renter's policies take into consideration a number of metrics to determine risk. Everything from the neighborhood in which you live, to how many times you've filed a claim in the past are taken into consideration. Even things like your past payment history and your credit score will be scrutinized to see how much of a risk you are as a tenant. Another big factor is for all you pet owners out there. If you own certain breeds of dogs or other potentially dangerous pets, you may find you'll be required to pay more to get the coverage you seek. On the other hand, certain safety devices like deadbolts, burglar alarms, and fire sprinklers can qualify you for a discount. Your best bet to find the coverage that fits your needs at the best price is to deal with an independent insurance agency that can shop the policy around for you.