Why you should have Renters Insurance

There are two important reasons for you to maintain renters insurance if you are an apartment dweller. The first and often most obvious reason, is that this coverage will protect your “stuff”. The second, not so obvious reason is that a renter’s policy will actually pay for damages incurred by you if you injure someone or damage their property The insurance company will pay for your legal defense also.

People who rent have no ownership interest in the building they live in, which means that if it burns down, they only have to worry about finding another place to live, not rebuilding it. However, a renter still owns “stuff”, and that is what a renter’s insurance policy will provide coverage for.

In Section I – Property Coverages, there is a coverage called “Coverage C – Personal Property”. This basically describes coverage for your “stuff”.

Under that same section, there is “Coverage D – Loss of Use”. This describes what is covered as far as extra expenses you might incur if there is damage to your apartment and you have to make temporary arrangements to live elsewhere while repairs are made.

Then, there is the “perils” section of the policy typically called “Section I – Perils Insured Against”. So we are still in Section I, and we are still talking about coverage for Property, but now we can see what kinds of losses are covered. Under a typical HO-4 form, there are 16 covered causes of loss. If you have damage to your “stuff”, it must have been caused by one of those 16 things in order to be covered. After that section, there is an “Exclusions” section that then describes things are not covered. For example, “War” is an interesting one. This means that if we are attacked in an act of war, and foreign soldiers break into your home and shoot up all of your Britney Spears CD’s, there is no coverage. Sorry.

There are a lot of exclusions on a typical policy, and your insurance company will be happy to explain them to you if you make a claim, so it is often advisable to contact your agent in the event that you have damage to your “stuff” and seek their advice regarding coverage. If they tell you there is no coverage, you can ask them to submit the claim anyway so that you can get a written coverage denial. This denial will describe exactly which part of the policy applies to the loss and make it easier for you to see what their decision was based on.

In Section II, there is coverage for Liability. This section includes a Personal Liability coverage section that will pay for damages caused by an injury or property damage that you cause through your own negligence. This only covers you for accidents that you cause though, not “intentional acts”. There is also an exclusion for accidents involving motor vehicles. You should have automobile insurance for those kinds of accidents.

In addition to Personal Liability coverage there is also a “medical payments” coverage. This part is often misunderstood, but it is designed to pay for medical bills for someone who is injured in your apartment, or away from your apartment if certain conditions are met, like your dog bites someone in the park. What most people don’t realize is that this coverage applies without regard to liability. So, if you have some friends over and someone is injured in your apartment through no fault of yours, the medical payments coverage can pay for their medical bills up to a certain level. This limit is stated on your policy, and is usually pretty low compared to other limits, but it is designed to help out with medical bills if someone gets hurt.