Many people believe landlords cover insurance when they rent a home, apartment or condominium, but here’s the truth: if you want to protect your belongings, it’s your responsibility. In fact, many landlords now require tenants to carry a renter’s policy.
What does renter’s insurance cover?
While there are several types of renter’s insurance policies, the average policy will typically cover the damage or loss of property from the following:
- Fire or smoke
- Damage caused by vehicles
- Wind, hail or lightning storms
- Falling objects
- Damage from plumbing, heating or air conditioning systems (freezing, cracking, water eruption, etc.)
What doesn’t renter’s insurance cover?
Renter’s insurance usually doesn’t cover damage from:
- Earth movement
- Intentional destruction of property
- Government seizure
Actual Cash Value vs. Replacement Cost Value
Taking inventory of all the property you want to cover is step one. The next step is to determine the value of your belongings and how you want them covered.
Actual Cash Value (ACV) is coverage that only pays for the item’s cost after depreciation. The premiums are lower, but you could run the risk of an item being devalued when a claim is filed.
Example: Your laptop was purchased for $700 five years ago. If it’s stolen, the claim settlement could determine that after five years of wear and tear the laptop is only worth $400 minus your deductible.
Replacement Cost Value (RCV) is a little higher in premiums up front, but the full replacement cost is honored when a claim is filed.
Example: Your three-year-old sofa purchased for $4000 is lost in a fire and you file a claim for the full amount. You’ll receive the $4000.