Renters Insurance Explained
Why is renters insurance important?
Your landlord’s insurance DOES NOT cover your personal property. While your landlord may have insurance on the structure of the residence, this insurance does not cover your personal property.
What does that mean? Personal property can be described as the contents of the home, or all the “things,” like furniture, clothing, electronics, accessories, etc.
“If you turned your house upside down, anything that falls out is personal property.”
Renters Insurance provides coverage for your personal property in the event of damage by a covered “peril.” A covered peril is any event, causing damage to your property, that the insurance carrier will pay out to repair or replace your property.
“While your landlord may have insurance on the structure of the residence, this insurance does not cover your personal property.”
Breaking Down Renters Insurance
Coverage C – Personal Property
The amount of personal property coverage you have will vary depending on how much personal property you have. Take a “home inventory” to estimate the value of your personal property.
Ask yourself, if something was to happen to my home, damaging all of the contents, how much would it cost me to replace everything you had? Think about your furniture, clothing, electronics, cosmetics, collectibles, etc.
*Check out our Home Inventory Worksheet to help you determine how much personal property coverage you should have.*
Coverage D – Loss of Use
Coverage D is often referred to as Additional Living Expenses or ALE. This coverage provides for the costs associated with your residence becoming uninhabitable. For instance, if you are displaced from your rental home, apartment, etc., ALE coverage covers the cost of rent, hotel expenses, etc. for the duration of the restoration process.
The value of ALE coverage can vary depending on your insurance policy. Ask yourself, if I was to be displaced from my home, how much would it cost me to rent another property?
You can discuss the details of this coverage with your insurance agent.
Coverage E – Personal Liability
Coverage F provides the insured (the renter) with protection against claims against them from injuries and damage to people or property (i.e. bodily injury or property damage that you cause to someone else on your property).
For example, an individual slips and falls breaking their leg while visiting your residence. and decides to sue you for compensation. Generally, in an instance like this, personal liability coverage will cover the costs associated with the claims against you.
How much coverage do I have?
Limit of Liability
A limit of liability is the maximum coverage amount. In other words, it is the maximum dollar amount that your insurance carrier will pay out in the event of a covered loss.
Limit of liabilities vary and should be discussed with your carrier when making decisions about renters insurance.
Example: An insurance policy may look like this.
- Coverage C – Personal Property = $25,000.00
- Coverage D – Loss of Use = $7,500.00
- Coverage E – Personal Liability = $500,000.00
In this example, the insurance carrier will cover the costs up to $25,000.00 to repair or replace personal property. However, any costs above $25,000.00 will not be payed out by the carrier.
Additionally, in this example the carrier will cover the costs up to $500,000.00 for claims or lawsuits brought against the insured for bodily injury or property damage to another person.
Unfortunately, unforeseen disasters do happen. As a damage restoration contractor we see them every day. Our years of experience have taught us the importance of having coverage when a disaster happens. Fortunately, the cost of renters insurance is less than the cost to replace your personal property.
As always, you should contact an insurance agent for specific renters insurance policy costs and questions.
Remember, if you live in a large complex someone else in the building can create issues for you that are out of your control.
For instance, someone in your building causes a fire that also damages your unit and your personal property. In this case, you are still responsible for your own personal property items.
While you are not responsible for the structure, any of your personal belongings that are effected by the fire or other disaster are not covered unless you have your own renters insurance policy.
Most importantly, it is always a good idea to reach out to your insurance carrier with questions about coverage and review your own renters insurance policy. Understanding your coverage is an important step in preparing for any disaster.
You can find more helpful information about renters insurance at https://www.iii.org/article/renters-insurance and https://insurance.illinois.gov/HomeInsurance/consumerHomeowners.html
Sources: Insurance Information Institute (iii.org)
Illinois Department of Insurance (Insurance.illinois.gov).