Mapping The Insurance Maze

Hello World.

Thanks for coming back for another adventure in navigating the Maze of Insurance.

So let’s get down to the nitty gritty. You’re trying to rent an apartment or home, and the rental owner/apt. complex has advised that you must purchase Renters Insurance. Well what is it…..and why do you need to invest in it?

Where to start?

For a Renter, Renter’s Insurance is probably one of the most important things you can invest in to protect your assets. So many people think that because the apartment complex or the landlord has insurance, that their insurance covers your items.

That is WRONG! WRONG!! WRONG!!!

The insurance that the apt. complex/landlord has, is for their assets and the structure of the home. It does not cover any of your personal belongings or items.

I want to share a story with you all. Before I ever stepped foot into an insurance company, I learned at the age of 19 why Renters insurance was important. I was a freshmen in undergrad. The weather had made an immediate turn, and went from the nice 55-60 degree day in November, to a brisk 20 degrees. That quick change caused the pipes in my dorm hall to freeze up, and burst on the first floor. Every student that lived on the first floor lost most of their personal items. TVs were destroyed, clothes, linens etc. The school insurance doesn’t cover their belongings, and unless their parent’s wanted to file a claim under their home insurance policies, the students had no way to replace those items, short of buying everything out of pocket. This is where Renters Insurance comes into play.

The official term for a Renters policy is called an HO4, or Homeowners #4 (form). Renters insurance provides coverage for YOUR Personal Property. Personal Property can be YOUR clothes, shoes, furniture, electronics, etc. I say YOUR because often times, some get confused into thinking that it covers everyone’s items, and that is not always the case.

**Please check the definitions section of your policy to determine how your carrier defines an Insured in your policy. This will tell you whose items the policy will cover, and provide any stipulations. **

YOUR policy may also provide Coverage D – Additional Living Expenses (ALE) coverage, if you are displaced due to a covered loss, and the residence is not fit to live in/uninhabitable.

Example
Because the students at my school could not live in their dorm room, and were displaced due to the water damage, the students could elect their Additional Living Expense Coverage. This would have provided funds for them to temporarily move to a safe, secure location, until their rooms were repaired.
…

So you have an understanding of what it does for YOU, as the consumer, but why is the landlord concerned with you carrying Renters Insurance if it only covers YOUR property?

Here’s why. In addition to the coverage for your personal property, the Renters policy provides Liability coverage to protect in the event that you cause a loss. It is called Liability Coverage.

Example.
If you are cooking, and accidentally catch your apartment on fire, and the fire spreads to the unit to the left, the next door tenants or that unit will have sustained significant damage. The landlord can go after your policies liability coverage to make those repairs, because they would be losing money.

Renters Insurance can protect you for both incidents that may have been caused to and by you.

This is a product that I strongly encourage you to look in. So many discount and devalue all the things that they have. I guarantee, if you went through every item you had, every piece of furniture, every electronic, you’d be surprised at how much it’d cost to replace it.

Also, Renters is typically inexpensive. Most policies, even in the higher priced areas, cost about $30-40.00 a month. If nothing else, it’s worth it for having that peace of mind.

I hope I was able to simplify Renter’s for you. If you have questions, please don’t hesitate to comment below.

~ Til Next Time!