While renters’ insurance is inexpensive, less than 60% of renters, carry renters’ insurance, according to various surveys by the Insurance Information Institute and other entities. The number of homeowners with homeowners’ insurance is over 90%, according to data from the Insurance Information Institute. In previous issues, we have discussed the details of homeowners’ insurance policies and the powerful benefits and features. The renters’ insurance policy is also a very powerful policy. So, why are not more renters carrying renters’ insurance? In certain instances, renters’ insurance is required by landlords. It turns out however, that many renters are unaware of the benefits and features of renters’ insurance policies. In this issue, we will discuss details of renters insurance policies.
The primary benefit is coverage for contents in the home. In the case of homeowners’ insurance, we had discussed Coverage A, Coverage B, Coverage C and Coverage D. Recall, Coverage A covers the home itself and attached structures whereas Coverage B covers unattached structures such as a storage shed. Coverage C covers contents in the home such as furniture and appliances and musical instruments whereas Coverage D covers loss of use. In the case of renters’ insurance, the landlords’ insurance would account for Coverages A and B. Renters, however, need coverage for contents in the home i.e., Coverage C. The value of these contents or property should be carefully determined. It should include furniture, electronics, clothing and other household items. According to estimates from State Farm Insurance, the average person has property or belongings that are worth over $35,000. Replacing these items would be costly, indeed, without renters’ insurance. The property may be in your apartment or in your vehicle or your storage unit. A renters’ policy also provides specific coverage for loss of use, if the apartment or rented property, becomes uninhabitable.
If you own expensive items, especially items that may be worth thousands or tens of thousands of dollars, you may want to insure them separately with a Personal Property or Personal Articles policy. These items could include Jewelry or Fine Art or Musical Instruments or Cameras. Just as is the case for homeowners’ policies, a Personal Property or Personal Articles policy provides broader coverage.
Another major coverage is for Liability. In the homeowners’ policy, Liabilities is covered in Section II of the Policy. Renters may be exposed to Liabilities as well. This is why certain Landlords require, that renters carry renters’ insurance. Careful thought should be given to the Level of Liability Coverage. Let’s say a visitor slipped and fell in your apartment, became seriously injured and was hospitalized. Subsequently, the visitor sued you for damages. The Liability Coverage in your renters’ insurance policy would help you pay for damages. The typical renters’ policy provides $100,000 in Liability Coverage. However, if your exposures are significant, you may choose a Liability limit equal to the total value of your assets.
Renters may also avail a Personal Liability Umbrella Policy (PLUP). An Umbrella policy covers damages over and above the limits of your underlying auto, homeowners’ or renters’ policies. Major Insurers such as State Farm offer minimum coverages of $1 Million which can be increased in $1 Million increments. This coverage is especially useful when your liabilities exceed your Auto or Renters’ insurance limits. This coverage is also very useful because your underlying policies may not cover certain claims. These claims may include defamation of character, libel and/or slander.
If you work out of your home, you may want to obtain business property coverage. You will also want business or professional liability coverage. Professional liability provides you with coverage for claims that might arise in the course of your business activities.
Another important insurance coverage is Cyber Events or Fraud Coverage. This coverage is specifically tailored toward losses arising out of cyber events, identity theft and other related losses.
As you can sense, the renters’ insurance policy is a very powerful policy. It provides you coverage against a wide variety of losses. Insurance Agents should inform and educate consumers to ensure that more renters are aware of renters’ insurance and choose to carry it.