You may think buying renters insurance means you’re covered for just about any disaster, but that’s not the case.
Insurance is meant to provide peace of mind. However, there are some things you might not get. Like any other insurance policy, renters insurance has exclusions, and knowing about them ahead of time can help you avoid unexpected bills in a disaster.
Knowing what you are covered is just as important. You might be surprised at the coverage in your policy, which can save you money later.
Covered: Belongings outside your home
Renters are well aware that insurance covers personal property within their homes, but they may not know that their belongings can be covered off-premises as well. This includes when they travel. Barbara Madvin, an insurance agent at Gaspar Insurance Services, says vehicle break-ins are some of the most common insurance claims she sees for renters. Your auto policy covers damage to your car, but your renters insurance covers items taken from your vehicle. However, you must have a higher deductible.
If you need to move your belongings from your home to a storage facility, friend’s house, or other location to protect them against a covered disaster, your renters policy will cover them. This can prove to be especially valuable in the event of a hurricane evacuation or wildfire, according Christine G. Barlow (chartered property casualty underwriter). This coverage usually lasts for 30 days.
If your rental is not habitable, you are covered for living expenses
Your insurance company will often pay to cover you for living in another place while your home undergoes repairs from a fire, flood, or other covered disaster.
The definition of “normal living standards” is much more expansive than you might imagine. Barlow is the managing editor of FC&S Expert Coverage Interpretation (a trade publication). Your insurer should help you find pet-friendly accommodation or allow you to board your pets where they are normally.
Not covered: Common disasters
Renters insurance typically covers only your possessions in certain scenarios or “named perils”, as they are called in policy. These include fire, theft, wind, and other hazards. Barlow states that if something isn’t on the list, there’s no coverage.
Flood damage, for example, is usually excluded from renters insurance and must be purchased separately. One exception is USAA, which provides flood coverage to military families.
Brand-new items are not covered
Madvin suggests asking whether your policy includes replacement cost coverage. If your policy does not cover replacement cost coverage, then your belongings will be covered for the depreciated value of their items, which is often insufficient to purchase brand-new replacements.
Imagine your TV being stolen from 10 years ago. The replacement cost is not included. Madvin states, “The carrier will say, “OK, you paid $1,000 10 years ago for it; we’ll now give you $250.” You’ll be able to buy a new TV with replacement cost coverage.
Expensive items not covered
Renters policies typically cover expensive jewelry up to a specified limit, usually $1,000 to $2,000. Madvin and Barlow both recommend that you add separate coverage if you have a high-end engagement ring. A appraisal is required in most cases.
How to avoid surprises
Before buying renters insurance, take inventory of your belongings. Barlow states that most renters underestimate the amount of stuff they own, which can lead to coverage gaps. Barlow suggests using the Encircle app for uploading photos of your belongings to estimate their value. Similar apps include Sortly, Allstate’s Digital Locker and others.
It is important to read your policy carefully. Barlow recommends marking your policy with the details that are covered and those that aren’t. Madvin recommends paying attention to endorsements on policies, which are often add-ons or excluded from standard coverage.
Are you confused by all the legalese. Talk to an expert. A broker or insurance agent can help you to understand your options and make sure you are fully informed about the policy. Barlow states that unless you are an expert in insurance, it is easy to overlook coverages or not know what you have.
