Eric A. Cioppa
President, National Association of Insurance Commissioners, Superintendent, Maine Bureau of Insurance
Landlords might cover repairs, but who has your back in a break-in? Learn how renters insurance can save your belongings and your bank account.
If you are renting your home, you might think, “Why do I need insurance?” After all, your landlord is responsible for any problems with the building. However, your personal belongings will not be covered by the landlord or property management company’s insurance policy, should anything be damaged or stolen — leaving you with the loss.
Most policies provide two basic types of coverage: personal property and liability insurance. Personal coverage pays to repair or replace personal belongings if they are damaged, destroyed, or stolen. Liability insurance provides coverage against a claim or lawsuit resulting from bodily injury or property damage to others caused by an accident while on the policyholder’s property.
Thankfully, renters insurance is not that expensive, with an average policy costing between $15-$30 a month. Replacing all of your possessions or being liable for an accident on your premises, however, will likely cost much more. Even if you don’t think you own enough valuables to justify the cost of renters insurance, it’s worth taking the time to evaluate the cost of replacing what you do own — you might be surprised. If you have unusually expensive items, such as fine jewelry or an art collection, these may require you to purchase additional coverage in the form of a rider or floater.
Sold on security
Once you have decided to purchase renters insurance, you will need to determine if you want to purchase coverage for actual cash value or replacement cost. Actual cash value coverage will reimburse you for the cost of the personal property at the time of the claim, minus the deductible. Replacement cost coverage will reimburse the full value of a comparable new item post-purchase.
Many insurers will reduce your premiums if you have alarms, fire extinguishers, sprinkler systems, and/or deadbolts on exterior doors. Some companies might also offer discounts if you have more than one policy with them. Make sure to ask policy providers about possible discounts.
Lastly, remember an insurance policy is a contract. Be sure that you understand what is covered and what is not before you buy a policy.