RENTERS INSURANCE
Why would I want to buy renters insurance?
If you live in an apartment or a rented house, renters insurance provides important coverage for both you and your possessions. A standard renters policy protects your personal property in many certain cases of theft or damage and may pay for temporary living expenses if your rental is damaged (including loss of use). It can also shield you from personal liability. Anyone who leases a house or apartment needs should consider this type of coverage.
What are the available limits on a standard renters policy?
[Note: This answer is based on the Insurance Services Office's HO-4 policy.]
A renters policy commonly contains four separate sections, referred to as Coverage C, D, E, and F.
- Coverage C provides protection for your personal property, such as furniture and clothing. This coverage limit is chosen by you when you purchase the policy.
- Coverage D provides coverage for loss of use, that is, the additional expenses you incur when your apartment cannot be used because of an insured loss. The limits provided here are usually 20% of your personal property (Coverage C) limit.
- Coverage E covers your personal liability claims and suits for bodily injury or property damage. This coverage limit is chosen by you when you purchase the property.
- Coverage F — Medical Payments to Others — pays for medical expenses for minor injuries to others even if you were not at fault. The policy normally includes limits of $1000 per person.
How does a renters policy protect my personal property?
A renters policy provides named perils coverage. This means your property is protected from all the perils that are specifically listed on your policy. These usually include:
- Fire or lightning
- Windstorm or hail
- Explosions
- Riots
- Aircraft
- Vehicles
- Smoke
- Vandalism or malicious mischief
- Theft
- Falling objects
- Weight of ice, snow, or sleet
- Accidental discharge or overflow of water or steam
- Sudden and accidental tearing apart, cracking, burning, or bulging
- Freezing
- Sudden and accidental damage from artificially generated electrical current
- Volcanic eruptions (but this doesn't include earthquake or tremors)
Renters coverage applies to your personal property no matter where you are in the world. This means you're covered when you are on vacation as well as at home.
Do renters policies provide coverage for personal property such as jewelry, furs, firearms, or silverware?
A standard renters policy provides limited named perils coverage for certain types of personal property. For example, the policy limit is $200 for loss of money, $1000 for loss of securities, and $1000 total for theft of jewelry, watches, and furs. Other types of property with limited coverage amounts include: firearms, watercraft and their trailers, trailers other than those used with watercraft, silverware, business personal property on the residence premises, and business personal property away from the residence premises.
If you own any of these types of items, you can buy a scheduled personal property endorsement. (Endorsements are optional agreements which alter the provisions of your main renters policy.) This particular endorsement allows you to purchase additional coverage for your list of valuable possessions. Each item is specifically described and has a separate limit of insurance. An additional benefit of this endorsement is that it provides coverage for this property on an all risk or open perils basis. This means these listed items are protected from any perils (unless the endorsement specifically prohibits them).
The cost of a personal property endorsement depends on the type of property and the amount of coverage you purchase for each item.
What is personal liability coverage and why do I need it?
A standard renters policy provides personal liability coverage, which applies anywhere in the world. This protects you and your family in case someone brings a claim against you or sues you, alleging that you caused them either bodily injury or property damage.
Personal liability coverage covers claims for bodily injury or property damage caused by an insured as long as it isn't vehicle-related and does not arise from business activities. In addition to the limit of liability, your insurer must pay all legal defense costs if an insured is sued for something that is covered under the policy.
Also, the insurance company will pay up to $500 per occurrence for damage to property of others caused by the insured. For example, if you go to a party at someone's home and damage their property, this coverage will pay the cost to replace the property whether or not you were negligent.
How does an insurance company determine my renters insurance premium?
The following factors will affect your premium rate:
- Territory
The geographic area where you live will influence your rate because certain regions are more subject to specific perils, such as hailstorms in some areas of Texas.
- Public Fire Protection Class
The degree of fire protection provided in your area is ranked on a scale of 1 (best) to 10 (worst). Areas with no fire department within 10 miles, or with a very poor water supply, may be classified as protection class 10.
- Construction
The construction type of your building (such as frame or masonry) can affect the premium that you pay. If you live in an apartment building, the number of apartments per building is also taken into account.
- Coverage Amount
The limits of liability or dollar amount of coverage you select will affect your premium.
- Additional Coverages and Endorsements
Increasing your coverage by selecting additional, optional coverages or endorsements will increase your premium.
Here are some ways that you can reduce your renters insurance premium:
- Deductible Amount
The standard deductible for Coverage C is $250. Choosing a higher deductible (up to $2500) can reduce your premium substantially. But be aware that if you've chosen a higher premium, you may have higher out of pocket costs in the event of a loss.
- Multiple-line Discount
Many insurers will offer discounts if they provide your automobile insurance as well as your renters insurance.
- Alarm Systems
Premium credits are often available for burglar alarms, sprinkler systems, fire alarms and smoke detectors.
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