What Does Renters Insurance Cover

Renters insurance, an extension of the classification of homeowners insurance policies, is designed to protect renters from financial loss. One of the most popular types of insurance coverage, renters insurance is a necessity for those who wish to rent a home, apartment, or condominium, and it should always be a top-priority for prospective renters. Regardless of the location, price, or the color pattern you choose for your apartment, you need to know what your renters insurance will cover.

Renters insurance covers most everything that you own in the specific place that you choose to rent. Thus, renters insurance is often called “home contents” insurance because it protects not the home or apartment building itself, but the contents contained within the home.

In terms of homeowners insurance, the policy is written as the HO4 form. The HO4 type of insurance coverage is an extension of the HO1-HO3 types, and may be written with the same coverage levels as either HO1 or HO2 coverage.

What you’re protected against
In general, homeowners and renters insurance is sold as protection against specific losses. An HO1 policy, the most simple type of coverage often rewritten for renters, includes protection against 11 different losses. These losses include fire and lightning, wind and hail, theft, damage to home contents sustained from a car accident or aircraft, civil commotion and rioting, vandalism, smoke, broken glass, volcanoes (for areas where this is a concern) and your own personal liability.

You will note two very important omissions from this type of policy: flood insurance, and earthquake insurance. Both types of natural disasters are rare, but when they happen they are usually very costly in terms of damages. Most insurance companies avoiding writing such policies because they are difficult to predict, and one earthquake or major flood can put an insurance company out of business quickly.

To receive more coverage, renters might be careful to adopt an “all inclusive” policy, or one which protects against any risk not named directly in the policy. Such renters’ insurance contracts are commonly written for renters in areas that are not prone to flooding or earthquakes, however, they are still more expensive than the basic HO1 insurance coverage.

Picking your protection
In most cases it makes sense to pick a higher deductible for claims, so as to avoid paying a higher monthly premium. A deductible of $1,000 is common, since most damages are lower than this amount.

When choosing a deductible, keep in mind what assets you will store in the rented space, and how much of a financial loss you can stand to bear in replacing these items. Jewelry, for example, is often worth far more than $1,000, and thieves can leave the home with a mere handful all the while removing several thousand dollars’ worth of assets from your apartment or home. Always consider these valuables and potential risks, and never take on more risk than you can bare.

Keep an inventory
After purchasing a policy, you’ll need to document the things you own to be sure that they are protected against loss. Insurance fraud runs rampant, especially for theft claims, so having an inventory of the items you own will help your credibility should your valuables ever be stolen.

Your inventory of your assets should be as descriptive as possible. An engagement ring, for example, should be noted as having a certain cut, quality, and value for the diamond, and the band should also be noted. A one-carat engagement ring costs as little as $500 when inexpensive metals and poor quality diamonds are used, but one made of the highest-quality platinum and best cut of diamonds might cost $15,000 or more. You wouldn’t want to be left with an insurance payout for any amount less than replacement value.

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