Though it might sound simple, the most important thing to know about renters insurance is what it covers. Insurance companies have different coverage limits and exclusions. Avoid misunderstandings and headaches by doing your homework and knowing exactly what your policy covers (or doesn’t cover) and for how much.
In general, most policies offer the following:
Personal Property Coverage. Your personal property includes anything that isn’t the structure of the property, like your furniture, appliances, electronics, clothes, and home decor. Some insurance companies also include pets under this category. Personal property coverage protects your personal belongings even when they’re not inside your home (like in your car, for example).
Personal Liability. This coverage protects you financially from accidental damage to someone else’s property or unintentional injury to a person. If a guest slips and falls in your house or your dog bites your neighbor’s kid.
Additional Living Expenses (ALE). ALE covers the cost of staying in a hotel for a set period while your place is unlivable, like after water damage or a fire in your apartment.
Medical Payments to Others. Medical payments to others covers just that, the medical bills of the people injured while visiting your rental property.
Most insurers and brokers offer these four basic types of renters insurance coverage. The amount of coverage and items covered, however, differs from one provider to the next.
For example, many insurers cover electronic equipment under Personal Property, yet not all of them do. Some companies offer equipment protection as an “add-on” policy.
Add-ons cost extra, so including them in your policy will raise your premiums. Nevertheless, it may cost less to have additional protection for valuables that are very important to you, like electronics, if their value exceeds your coverage amount.
How Much Coverage Do I Need?
Now, how do I know how much coverage I need for my belongings? Well, you have to assess your property by doing an inventory. The inventory can be as simple as a list of your belongings with estimated prices. Some companies may ask for more than that, but it will depend on the insurer and insurance product.
Let’s say, for example, that you have a small DVD collection. You don’t remember what each DVD cost because you’ve collected them throughout your adult life but based on a quick Google search you estimate that together they’re valued at around $300. If your collection is stolen, your insurance company is unlikely to have an issue with you filing a claim for that amount and not having receipts to back up the claim.
If your $2,000 TV is stolen, on the other hand, you’ll likely be asked to present a receipt of purchase for your covered claim to be approved. And again, if your Personal Property coverage doesn’t include electronics or only covers electronics for up to a certain amount lower than the value of your property, you won’t be covered.
Choosing an Insurance Carrier
With so many similar options out there, it can be hard to choose one insurer over another. According to ConsumersAdvocate.org’s Best Renters Insurance Guide, the best carriers are those that:
· Offer a streamlined claims process
· Offer a good range of discounts (that you may qualify for)
· Have high customer service ratings.
Regarding online customer reviews, take them with a grain of salt. Some studies reveal that customers who are dissatisfied with a service are more likely to leave unfavorable reviews, while satisfied customers are less likely to leave reviews online.
When reading customer feedback, pay attention to the complaint to try to figure out whether it stems from the customer’s misunderstanding of the product, like their insurance policy, or from a more serious issue on the part of the company.