Renter's Insurance: A Small Price to Pay

Special to The Washington Post
Sunday, September 24, 2006

Assuming you haven't spent the weekend scraping the ashy cinders off your favorite shoes from a fire in your apartment, put this on your to-do list for Monday: renter's insurance. Your landlord's insurance protects the property in general, but not your stash of stuff. And with the hours you worked to buy your things, it makes sense to spend a few extra dollars protecting that flat-screen TV and plush recliner.

"Renter's insurance is the kind of coverage that is the least expensive but the most needed," says Madelyn Flannagan, vice president of education and research for the Independent Insurance Agents and Brokers of America, a trade group.

More than two-thirds of U.S. families that rent lack renter's insurance, according to a study released by the IIABA's consumer protection arm, Trusted Choice. And nearly a quarter of those interviewed for the study either had not heard of this type of protection or thought they didn't need it.

Arlington resident Marguerita Rollins always believed that having renter's insurance was "the right and smart thing to do." With a 95-pound dog, she wanted to protect herself from any trouble he might stir up. But it was this summer's heavy rains and flooding that left her wet, homeless and grateful for the coverage her renter's insurance offered. When hours of rain pounded through an improperly installed air conditioner, a wall collapsed, ruining her bed, linens, rug and many other personal items. Her apartment in ruins, she was forced to find a home for herself and her dog.

"All of a sudden, I had all of these costs," Rollins said. She had to move out of her apartment and pay for storage, a sublet in addition to her original lease, kenneling the dog and cleaning her damaged clothes. And although the claims process was difficult, her insurance company paid for her unanticipated living expenses, storage and even part of the dog-boarding costs. As she awaits reimbursement for lost property, she realizes "it is nice to know that while I am replacing things, hopefully I will see a check down the road."

As with any kind of insurance, it is important to understand exactly what you are getting. Here are some key points to consider when choosing a policy:

Cost: According to the IIABA, the average cost of renter's insurance is approximately $20 per month, a relatively small amount for the peace of mind that comes with knowing that if anything happens to your apartment -- or in it -- you won't be financially broken.

Coverage: Though every policy is different, and you should read the fine print, almost all renter's insurance policies cover the loss of your property due to theft, fire, smoke, lightning, windstorm and broken plumbing as well as your own and your pet's liability. Possessions that are in your car, but not part of your car, also are covered.

One of the unexpected bonuses is that a renter's policy often covers liability you create, even outside the home. If your pit bull eats the neighbor's bichon frisé for lunch, for example, any financial responsibility you might have, up to the policy limit, might be paid by your renter's insurance. The same goes for liability within the home. If someone trips and falls in your apartment, your renter's insurance will kick in here, too.

Finally, some policies have provisions for such things as "additional living expenses," which require the insurance company to pay for you to live in a place for a specified period if your home is uninhabitable. So if your upstairs neighbor forgets to turn off her bathtub faucet and your apartment looks like Noah went through with his ark, your policy may help you pay for a temporary place to call home.

Terminology: In general, renter's insurance policies allow you to receive the actual cash value for your belongings -- not the replacement value. Don't know the difference? You're not alone. Ask what any unfamiliar terms mean. In this case, let's say someone breaks into your pad and swipes your stereo. Actual cash value insurance requires the insurance company to pay you merely what your 15-year-old boombox is now worth. If you had replacement insurance, you would be reimbursed for the cost of a brand-new stereo. (With either type of policy, you'd have to cover your deductible before you get any cash.) If you want replacement insurance, you need to ask for it -- and pay for it.

Also, be sure to ask what's not covered or what's limited by your coverage. Some things -- art, fur, jewelry or other especially valuable items -- may need a separate policy (called a "personal articles floater").

Where to Find It: Start with the folks you buy your auto insurance from -- some offer a discount if you buy both your auto and renter's insurance from them. That's what Rollins did, and what she saved brought down the cost of her renter's policy to almost nothing, she says. If that option is unavailable, , the IIABA's consumer Web site, lists independent agents and brokers. Or try , a consumer-oriented site that matches insurers with potential clients.

Jennifer Ramo is a lawyer and freelance writer.

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