Renters insurance, like homeowner insurance, is sold as a package. Renters insurance provides coverage for your personal belongings and personal liability (legal responsibility) in the same way that a homeowner policy does. However, rental policies do not provide coverage for the value of the building you rent, so the premium for tenant coverage is low.
Reasons for Renters Insurance: Typically, the homeowner’s policy that covers the building you live in does NOT offer any protection for your property, your cost to find other housing, or your personal liability. If you rent an apartment or a home, you will not always be required to have renter insurance by the lease, but without it you are often left out in the cold if the building is damaged or you are a victim of theft. Renters insurance will also cover you if someone is injured in your home or elsewhere due to your negligence.
Renters Insurance for College Living:
- If you live on-campus: Check and see if your belongings are covered under your parent’s homeowners policy. If a student is a dependent under their parent’s insurance coverage, their personal belongings may be covered in the event of a covered loss.
- If you live off-campus: Consider purchasing renters insurance. Renters insurance will provide coverage if your property is destroyed or stolen, or if someone is injured on your rental property due to your negligence. If you are dependent on your parents’ insurance, check with their agent or insurance company to see if the coverage extends to a dependent living away at school.
Multiple Roommates: Renters insurance usually covers you or any relative you live with. If you live with non-relative roommates, each of you would need your own renters insurance policy to cover personal belongings and personal liabilities. Check your insurance policy contract or talk to your agent or insurance company for more details.
Selecting an insurer for renters insurance
Coverage and costs vary greatly by company. It’s important to shop when choosing an insurance company. Comparison shopping takes a little more time, but it can save you money!
- The key to comparison shopping is knowing what coverage you need and then getting premium estimates (rate quotes) from a number of insurers. Each policy should provide the same amount of protection for your home, its personal contents, liability protection, and medical payment coverage. If you want full replacement-value protection on your house and personal items, make sure this coverage is included in all policies you consider.
- Renters insurance companies use one of three methods to sell their products.
- Independent agents represent several companies and can give you several quotes.
- Exclusive agents only sell the products of one insurance company.
- Direct market sales are over the Internet or by mail or telephone.
You can find insurance companies and agents through the phone book, on the Internet and television and by asking friends and neighbors.
- Have the agent explain the exclusions and limitations in the contract and quote options for perils like flood and earthquake that are not covered under the standard policy.
- Cost is just one factor to consider when choosing an insurance company. It’s also important to look at the company’s financial condition and how it treats its policyholders. A company’s financial information is available from the agent that represents the company.
- It’s illegal for unlicensed insurers or agents to sell insurance. Business cards aren’t proof that an agent is licensed. If you do business with an unlicensed agent or company, it might not pay your claims or refund your premiums if you cancel your policy. If an unlicensed agent or company contacts you, check with your state insurance department immediately, so it can investigate. Your actions may protect someone else from being victimized.
Questions you should ask the agent
- Are the agent and the insurance company licensed by my state insurance department? For how long?
- How can I find out the claims history of the home before I buy it?
- If I submit a claim, how will it affect my premium when I renew the policy?
- What discounts are available?
- What does the policy cover? What doesn’t it cover? What are the limits to the coverages?
- How much coverage for my personal property do I need?
- Should I buy flood insurance or earthquake coverage?
- How will my credit history affect my premium?
- Underwriting standards
Underwriting standards are rules insurance companies use to decide whether to insure your property. A company may decline your application for coverage if your property does not meet its underwriting standards. Each company has its own underwriting requirements, but typical ones include:
- Age, condition, and square footage of your home
- Property upkeep and maintenance
- Type of construction (brick, frame, stucco, etc.)
- Exterior lighting or security systems
- Home value and proximity to fire protection