Did you buy the wrong renters insurance policy?
What kind of renters insurance policy did you buy?
Recently a client of mine decided to take my advice and required all tenants to carry a renters insurance policy with a minimum of $100,000 of liability insurance. As a landlord he was potentially in a situation where his insurance may be forced to pay for a tenant’s liability claims, if someone was injured on the property. Besides, it’s a good idea to have a policy to protect your personal belongings anyway as a renter.
How much renters insurance should you have?
Renters insurance policies offer coverage limits of at least $20,000 and can be increased from there with premiums ranging from $100 to $200 annually depending on your zip code and any prior claims.
Buying Renters insurance Do’s and Don’ts
So, getting back to the required policy making sure you’re getting the right one for the right money. Several of his tenants contacted me about getting a quote and making sure the landlord was properly added to the policy per his new rental agreement. Several weeks went by and closer to the deadline for all tenants to comply when I was having a conversation with the client about one tenant. He told me the story about how one of the renters got a cheap renters insurance policy from AAA for $60 a year. I said wow, that’s a pretty good rate and I don’t recall ever seeing a renters insurance policy that cheap. I asked the client if he could email over a copy to 1st verify the correct additional insured verbiage was added and then I’d check the coverage’s or in this case the lack of coverage.
Well, let me see where to start; first off the policy was an ACV policy which stands for “Actual Cash Value” which basically means garage sale, flea market price coverage. Ten cents on the dollar if you’re lucky, image a TV bought 3-4 years ago for let’s say $1,000, you might get a $100 today. Picture yourself at a garage sale a your looking at a used TV, what do you think you’d pay the owner? That’s what you’d get with an ACV policy, Five to ten cents on the dollar.
The next thing I saw on the policy was the deductible – $1,000. Ouch, that’s a lot of money before the insurance company would even write a check. Let’s say the roof started to leak and ruined your laptop computer; the landlord is not going to be responsible – remember he’s requiring you to buy a policy to not only provide liability protection but personal property coverage for YOUR stuff. Quick story, I had a young lady 10 years ago call about renters insurance and never bought the policy. A few months later her dad called me and asked about the renters policy. I explained we gave her a quote and made a few follow up calls but she never bought it, why? Well, it turns out there was an electrical surge in the building and she lost everything plugged in: TV, Computer, Appliances, you named it was zapped dead. No coverage and no sympathy from the apartment complex who at the time even offered a $100 credit towards a renters insurance policy.
Taking a high renters insurance deductible may mean you get nothing
So, why do I mention the $1,000 deductible as a potential problem for the renter? Let’s do some quick math and assume if you add up everything a person might own including clothes, furniture, computer and TV totals $10,000. Remember its and ACV policy and there’s a total loss like a fire and you’ve got this policy the insurance adjuster comes out to total everything up and agrees with the $10k figure. Okay, now the pain sets in – $10,000 worth of stuff is now valued at ten cents on the dollar or $1,000 (-) minus your $1,000 deductible = $0.00 check to you. That $60 policy is not looking like a great deal anymore.
What kind of apartment renters insurance policy should you buy? Renters insurance basics
A full replacement policy with a reasonable deductible is what you need. Why short change yourself and think you’re getting this great deal when you’re holding an empty bag. Get a policy that will replace all your stuff with full replacement value. Second, get a reasonable deductible of $250 or $500 and based on policies we sell everyday I’d recommend a $250 deductible. I quoted a client on Friday $150 annually for a $250 deductible and $136 for a $500 deductible. $14 dollar difference in cost and two hundred and fifty dollar less you’d receive if there’s a claim.
Renters insurance is just common sense and most insurance companies will give big discounts on your auto insurance policy with multiple policy discounts. Read my article on buying 2 insurance policies for the price of one. Many of our clients save enough money on their auto insurance to completely cover the cost of the renters insurance policy. Get a trusted insurance agent or broker to go over the coverage’s and make sure you are fully protected against a loss claim.
Lastly, all renters policies I’ve ever sold come with a minimum of $100,000 and can generally be increased to $500,000 which not only is protection for your landlord but you.
What Renters Insurance Covers
Generally renters insurance companies sell policies that provide coverage for your personal belongings including clothes, furniture, small appliance, electronic and a small amount of jewelry. If you have hobbies or collections of valuable items you will want to get a rider or schedule those items separately as they will not be covered under a normal policy.
Please leave comments about your experience renting and any losses you may have had. I’ll respond to all inquiries online or you can call me at Insurance Brokers Group 800-459-6060 for more renters insurance information.