Basics of Renters Insurance

A survey conducted by the Independent A survey conducted by the Independent Insurance Agents and Brokers of America Insurance Agents and Brokers of America

found that nearly two-thirds of renters do not found that nearly two-thirds of renters do not have renters insurancehave renters insurance

Renters insurance is relatively inexpensive to Renters insurance is relatively inexpensive to ownown

Your landlord or association may have Your landlord or association may have insurance, but it only protects their buildinginsurance, but it only protects their building

Your belongings are not covered under their Your belongings are not covered under their policypolicy

Renters insurance protects individuals who live Renters insurance protects individuals who live in a house, mobile home, condominium, or in a house, mobile home, condominium, or apartment that is owned by another personapartment that is owned by another person

Items covered under a policy

Fire/LightningWindstorm/HailExplosionRiotDamage caused by aircraft/vehiclesSmokeVandalismTheftVolcanic eruptionFalling objectsWeight of snow, ice, sleetAccidental damage from plumbing, heating, air conditioning, sprinkler system,

appliance (includes freezing)

Floods and earthquakes are not covered under standard policies

Most policies cover the behavior of household Most policies cover the behavior of household petspets

Renter is liable for events they cause or which Renter is liable for events they cause or which occur within their homeoccur within their home

Some events which are caused by a landlord’s Some events which are caused by a landlord’s negligence may be covered by their insurance negligence may be covered by their insurance

instead of rentersinstead of renters

Actual Cash Value vs. Replacement Cost

Actual Cash Value (ACV) coverage pays only what your property was worth at the time it was damaged or stolen

Replacement Cost coverage will pay what it actually costs to replace item(s) lost – minus any deductible.

You pay more for this coverage

Take Inventory

To ensure compensation lost or stolen, inventory all personal belongings

List each item, value, and serial numberPhotograph or videotape each

room/building/garageKeep receipts for major items

Renters insurance will cover “additional living expenses” if rental unit becomes uninhabitable due to disaster (paying for you to live somewhere else)

Liability protection is standard with most policiesIf someone slips and falls by your unit, you are covered for any costs up to your liability limit.

Ways to reduce premiums . . .

Increase your deductible

Discount for “protective devices” (smoke/fire detectors, burglar alarms, fire extinguishers)

Discounts for those age 55 and retired

Discounts if you buy both auto and renters policies (multi-line discounts)

Value of typical single-person householdFurniture $8,000TV, VCR, stereo, tapes, CDs $2,000Computer $1,500Microwave $ 120Misc. appliances $ 240Clothing $3,000Photos, paintings, etc $ 800China, glassware, silverware $ 600Sports equipment $ 600Cameras, etc $ 800Books $ 700Jewelry $1,000Misc. $4,000 Total: $23,360

ScenarioJohn has the following renter insurance policy:• $250 deductible• $30,000Person Property Limit• $2,500 Special Limit for certain property• $100,000 Liability

John moved out of the dorms into an apartment with his friends, Chris and Randy. After talking to an insurance producer, John decided to carry renter insurance on his stuff. He gave the agent the following list of items to be covered:

• Clothes - $8,000 * Coffee table - $100• Textbooks - $2,000 * Lamps 3@$2each=$75• Couch - $150 * Bed - $200

Chris and Randy owned the $900 TV, $2,000 stereo, and $3,000 computer along with their beds, books and clothes, but they decided that they did not need insurance.

While on break from school, Chris had a grease fire in the kitchen, and everything was lost.

How much did John pay?

$10,525 (everything he had covered) $2,000 (textbooks only)

$ 250 (deductible only)

$250

(his deductible)

How much did Chris and Randy pay?

Nothing, insurance covered everything

They had no insurance, so had to pay for whatever they wanted replaced.

$250 (deductible)

They had no insurance, sowhatever they wanted replaced

would be at their expense.

How much did the insurance company pay?

$250 (deductible)

$10,525 (enough to cover John’s stuff)

$16,425 (enough to cover John’s stuff and the TV, stereo, and computer)

$10,525

(enough to cover John’s stuff)

Terms to Know

Deductible – amount of a claim you pay before the company pays anything

Actual Cash Value – current value of an item in terms of cash

Replacement Cost – cost of item as if replaced new

Depreciation – decrease in value of property

Terms - continued

Rent – payment in exchange for occupying another’s property

Security Deposit – money paid in advance of moving into another’s property

Amenities – items that make a property more attractive in comfort or convenience (swimming pool, health club, park, etc)

Terms - continued

Tenant – person that rents and occupies another’s property

Lease agreement - contract between owner of property and renter who will have temporary occupancy of property

Utilities – basic services of electricity, gas, or water

Terms - continued

Rental agreement – a contract between a landlord and tenant that provides for occupancy for a short period of time, such as one month; automatically renews at the end of this period, unless the landlord or tenant give each other the proper amount of notice to terminate the contract.

Rent – an agreed upon sum paid at fixed intervals by a tenant to the landlord for possession and use of property

Works Cited

Insure.comOhio Insurance Institute

DIFP (Dept. of Insurance, Financial Institutions, and Professional Registration)