Renters Insurance: Phenomenal Insurance Power
Renters insurance is often much broader than many people realize – while your landlord’s insurance is much narrower.
The main purpose of renters insurance is clear: to cover the contents of your home in the event they are stolen, burned by fire, blown away, or vandalized. However what many people do not realize, is that most policies cover these same contents anywhere in the world. Therefore if your computer or tablet is stolen during your vacation to Europe, it’s still insured.
Many renters believe their belongings are already insured; after all, isn’t that why the landlord has insurance? Except, it’s not. The landlord’s insurance usually only covers his or her property. You’re left stuck in the cold when that gas water heater dies.
“Your landlord’s policy covers their interest in the dwelling,” says Terry McConnell, VP and manager, Personal Lines Underwriting. “It will not protect your furniture or other possessions, only the physical structure itself.”
Speaking of water heaters, if something were to happen to your rental space that makes it uninhabitable for a period of time, a rental insurance policy will take care of assorted costs such as hotel expenses until you are able to move back in.
Renters insurance will also provide you with personal liability insurance — typically independent of location. Some renters have pets and liability coverage is provided even when your adorable family dog may inadvertently cause injury to someone.
“Many folks don’t consider liability coverage, since liability claims are not as common as property claims,” says McConnell, “but they often wind up incurring much higher dollar figures when they occur.”
All this protection typically comes at a low cost of around $100 each year. If you already have life or auto policies through the same provider, the cost may be even less.
Limits and choices
As with anything, limits do exist.
As a general rule policies typically provide coverage up to $25,000, but many policyholders feel this is not enough (an Erie Agent can help you figure this out — make sure you evaluate this with him or her before purchasing a policy, and in fact every time you are deciding upon a major purchase). In addition, possessions like valuable jewelry, guns and fine silverware have limits at $3,000 when the loss comes as a result of a theft. However, a renter is able to add a Floater to their insurance policy to provide an adequately higher limit coverage for these items.
You will also need to choose between an actual cash value or replacement cost policy. If the need for a claim arises, actual cash value will pay you the value of the lost possessions: the monetary value you paid, less depreciation; replacement cost coverage will pay enough to replace the items.
“Replacement cost is among the best deals insurance can provide,” explains McConnell. “Your stereo, after it has depreciatiated, may only be valued at $100 in real cash, while a replacement could cost over $400 — all of which would be covered by a replacement cost policy.”
The ultimate decision comes down to named-peril versus direct physical loss coverage. Named-peril policies describe the events that are covered: theft, fire, adverse weather, etc. Direct physical loss coverage will account for anything that isn’t already excluded, floods for example.
“ERIE, like most insurance agencies, does not provide a direct physical loss policy,” McConnell goes on to say, “but the majority of policyholders claims come from fire or lightning damage, refrigerated food spoilage, and theft, all of which we provide coverage for.”