Renter's Insurance

TIP OF THE DAY

Renter's Insurance

http://www.miami.com/mld/miamiherald/business/personal_finance/6816419.htm
BUSINESS
Posted on Sun, Sep. 21, 2003.


Renters insurance worth the cost

Michelle Singletary/The Color of Money

If you're renting, you should have renters insurance.

But alas, a recent survey has found that almost two-thirds of the 81 million people living in rental units do not.

This is not smart.

And don't even fix your mouth to say, ''I can't afford it.'' This is perhaps the cheapest insurance you can get. Skip just one movie a month (including the popcorn and soda) and you can afford renters insurance.

The average cost of renters insurance is $12 per month for about $30,000 of property coverage and $100,000 of liability coverage, according to a survey sponsored by the Independent Insurance Agents & Brokers of America.

Now, of course that's the average, which means the cost could be higher depending on where you live.

For example, if you lived in the following cities and bought renters insurance for $20,000 in content-replacement coverage, $100,000 liability, $1,000 medical (for accidental injuries to others) with a $500 deductible, you would roughly pay these yearly premiums, according to State Farm Insurance:

? $148 in Washington, D.C.

? $253 in Los Angeles.

? $208 in Chicago.

(Note: State Farm is no longer writing new renters' policies in Florida. Other companies are.)

Unless you can self-insure your property, meaning you have enough money saved to replace your clothes, jewelry, computer, DVD player and DVD movies, big-screen television, stereo equipment, microwave, video camera -- you get the picture -- you need renters insurance.

Now, if you're thinking you're covered under your landlord's insurance policy, think again. You're not.

''One of the top reasons why people don't have renters insurance is that they think because they don't own the unit, the landlord will be responsible if they have a loss,'' said Robert Rusbuldt, CEO for the Independent Insurance Agents & Brokers of America. ``But if the building burns down it's your responsibility to replace your property. If the building burns down and it's your landlord's fault, he's not responsible for one dime of the contents you own in your apartment.''

Your landlord's insurance covers only the building and the infrastructure of that building, such as the elevators, the air-conditioning system and the hallway, Rusbuldt said.

And what do you think might happen if the pizza delivery guy trips over your bicycle in your apartment and breaks his leg? He might sue you. But if you have renters insurance, you will likely be protected (up to a limit) from personal liability.

If your roommate has insurance and you think you're covered, think again. Each person in the rental property typically needs his or her own policy. Although you may be able to get a joint renters insurance policy, it's probably best to have separate coverage in case your roommate moves out.

Here's some good news for parents who have sent their children off to college. If a student is living in a campus dorm, his or her belongings may be covered under your homeowner's or renters insurance policy. But students living in off-campus housing need to double-check to see whether they are covered (typically they are not).

So how much renters insurance coverage do you need?

This depends on how much stuff you have. You'll need to estimate the value of your personal possessions. If you've kept receipts, that's even better. The idea is to buy enough insurance to replace everything if it's stolen, damaged or destroyed.

Since many insurance companies place limits on what they will pay for specific items, you may need to pay for additional coverage to make sure those items are completely insured. For example, you may have a family heirloom or expensive jewelry, furs or electronic equipment that could surpass the normal limits. You may also need to buy additional coverage for flood damage.

And don't forget to make sure your policy includes coverage of your pooch. Renters insurance policies usually cover dog bites, yet some companies may charge more if your dog has a tendency through its breeding to be aggressive.

When purchasing a renters policy, you'll need to decide what kind of coverage you want -- actual cash value or replacement cost.

Actual cash value is the less expensive of the two. Under this type of coverage your belongings are replaced after depreciation. This means the insurance company will take into consideration the age and condition of the stolen or damaged property.

A replacement-cost policy will pay you to replace your property with the same or a similar item at the current market price. Just know that premiums are usually higher for replacement-cost insurance policies.

Start looking for insurance by calling any insurance company you may already be doing business with. You can find an independent insurance agent by going to wwwTrustedChoice.com.

Just so you know, the average cost to replace all the personal property in a two-bedroom apartment is about $25,000, according to State Farm.

Do you have $25,000 saved to replace your property if it's all lost in a fire? Do you even have enough saved to replace the $4,200 in electronic equipment the average person has?

If the answer is ''no,'' then go get some insurance.

Michelle Singletary is a financial writer for The Washington Post. Listen to her discuss personal finance noon to 1 p.m. Tuesdays on WLRN-91.3 FM's ``Day to Day''.