Renters Insurance Q&A

The following questions and answers cover most of the basics, but it's critical that you do annual check-ups with your agent or company representative to review your policy and coverage limits.

• I am a renter, not a homeowner. Do I still need insurance?
• Isn't my apartment covered by my landlord's insurance policy?
• How are prices determined for renters insurance?
• I live in an apartment with three roommates. Do we each need a renters policy?
• Who decided how much my property is worth?
• How much will I be paid for damage to my personal property?
• Does my renters insurance cover my possessions even when I go on vacation?
• I work out of my apartment. Are my inventory and business property covered by renters insurance?
• Help! I've lost everything! Where do I start?
• Who keeps an eye on insurance companies?
• What do I do when my property is damaged or stolen?
• What if I'm sued or found responsible for injuring another person?
• What should I look for in an insurance company or agent?

Q. How much do you know about Renters Insurance?

Take the Allstate Renters Quiz here!

Q. I am a renter, not a homeowner. Do I still need insurance?

A. Yes. The same rule of thumb that applies to homeowners applies to renters. If a catastrophe struck tomorrow, could you afford to replace everything you own? Or if you were sued, would you have enough money to pay legal fees and possibly settle the suit? If not, chances are you would benefit from the protection that renters insurance brings.

Renters insurance offers the same general personal property coverage and liability protection as a homeowners policy. So, your camera would be insured while you are on vacation, and you would be covered if your sofa were to crash through the wall of your apartment lobby leaving a gaping hole. In fact, most policies are surprisingly extensive and may include additional living expenses (also called loss-of-use coverage), if you are forced by fire or other damage to live elsewhere. Flood coverage is also available to renters as a separate policy.

Q. Isn't my apartment covered by my landlord's insurance policy?

A. No, the landlord's insurance covers damage to the building and the landlord's property-not your personal property or liability. For instance, if you go out and leave the stove on, and an ensuing fire causes extensive damage to the entire building, you may be held liable to the landlord.

Q. How are prices determined for renters insurance?

A. Renters insurance is surprisingly inexpensive. Nationally, the average cost for a renters policy is $189 per year, or about $16 per month. That's because you are not insuring a building. Like all property/casualty policies, the value of your property to be insured and other risk factors are weighed by the insurance company to determine your premium.You may get a discount if you purchase auto insurance and renters insurance from the same company. Your insurance agent or company representative can help you find the best combination of coverage and cost.

Q. I live in an apartment with three roommates. Do we each need a renters policy?

A. Check with your agent or company representative. Usually, it is best if all roommates are on the same policy, although it is possible for each to purchase his or her own coverage. If you do need to "go it alone," you alone receive the security of renters coverage.

Q. Who decides how much my property is worth?

A. State laws may dictate how losses are to be figured, which means the same insurance company may use one method in one state and a different method in another. The common methods are:

• Actual Cash Value. The replacement cost of the item minus depreciation. For example, a new television set may cost $500. But if your 7year-old TV set gets damaged in a fire, it might have depreciated 50 percent prior to the damage. Therefore, you would be paid $250 for that set.

• Replacement Coverage. The cost of replacing an item without deducting for depreciation, but limited to a maximum dollar amount. Today's cost for a TV set with features similar to the 7-year-old one damaged by fire would determine the amount of compensation. If it still costs $500 today, that would be the replacement coverage. (It's important to remember that there are limits on this policy and you need to keep up-to-date on your coverage).

Q. How much will I be paid for damage to my personal property?

A. Your policy lists the specific monetary limits for personal property under what is called "Special Limits." Those limits usually are:

• $200 for money, bank notes, gold and silver (other than gold ware and silverware), platinum, coins and medals.

• $1,000 on securities, accounts, deeds, evidences of debt, letters of credit, notes (other than bank notes), manuscripts, passports, tickets and stamps.

• $1,000 on watercraft, including their trailers, furnishings, equipment and outboard motors.

• $1,000 on trailers not used for watercraft.

• $1,000 for loss by theft of jewelry, watches, furs, precious and semiprecious stones.

• $2,000 for loss by theft of firearms.

• $2,500 for loss by theft of silverware, silver plated ware, gold ware, gold-plated ware and pewter ware.

• $2,500 on property on the resident premises used for business and $250 on this property damaged or lost away from the premises.

If these limits seem low to you (maybe that engagement ring is worth much more than $1,000), you may wish to talk to your agent about additional coverage for specific items.

Remember that homeowners and renters insurance is designed to cover general personal possessions, not valuable collections like antiques, jewelry or original art. Insurance companies deliberately limit their coverage of expensive possessions so that household premiums are more affordable to everyone. After all, if they had to cover museum-level art collections under standard homeowners policies, we would all end up paying higher premiums to cover those expensive items.

Q. Does my renters insurance cover my possessions even when I go on vacation?

A. Yes. Renters insurance is a package of insurance coverage that extends to all your possessions no matter where they are. If you take a round-the-world vacation and lose a valuable item, as long as the loss is by a covered event or peril, the location does not matter, you're covered.

The liability component also extends well beyond the boundaries of your home. Should you be found legally at fault for injury or loss to another individual, whether you unfortunately and unintentionally cause a tumble down a San Francisco hill or a fall in an Indiana barn, for example, your homeowners policy likely will cover you.

As in the property section of a homeowners policy, there are limits and exclusions to personal liability. Your business activities, for example, are not covered under your homeowners policy. You also are not covered for injuries or damage you deliberately cause. Your policy lists specific exclusions and limits.

Q. I work out of my apartment. Are my inventory and business property covered by renters insurance?

A. Within certain limits. Both inventory and business property are covered as personal property used for business purposes. However, like all personal property, there are monetary limits on reimbursement. Whether your home business is your primary occupation or a hobby that nets you a few hundred dollars a year, it is still a business, and you should treat it as such. If you've invested quite a bit in equipment (woodworking tools, for example) and sell the occasional decoy, you should consider whether the personal property limits are sufficient. Click here for information on Home-Based Business Insurance.

Also, keep in mind that the personal liability protection in your homeowners policy does not extend to business liability. Check with your agent concerning your business insurance needs.

Q. Help! I've lost everything! Where do I start?

A. The best place to start after a great loss of property is with an inventory of that property. And the best time to make an inventory is before all is lost. If most of us suddenly found ourselves without anything due to some calamity, we would be hard pressed to know all that we had lost.

When was the last time, for example, that you counted the number of shoes or CDs you own, not to mention furniture, dishes, drapes, and audio/video equipment? How much is it all worth, and where would you start if you had to replace it?

Now is the time to make a list of major house, hold items and possessions. To make the job easier a home inventory form is available by clicking here. Where possible, it is wise to list the items' serial number, the date and the cost of purchase and the receipt.

Perhaps an even easier way to inventory your home is to use a still or video camera. As you take the video, you also can talk about the items, when you purchased them and how much they cost.

Whatever method you choose, have a copy made. Ask a friend or family member to hold on to it. Store your copy in a safe deposit box. Check with your agent, who may be able to store a copy for you. If the worst happens and your home is destroyed, the inventory will be safe at another location.

Also visit: Home Inventories

Q. Who keeps an eye on the insurance companies?

A. Insurance is a heavily regulated industry. Every state has some sort of department, administration or agency that regulates and monitors every insurer operating within the state's borders. In addition to approving rates, your state's insurance department is involved in all insurance matters on behalf of private citizens and businesses. It also issues operating licenses to insurers and agents, based on their ability to meet the state's requirements for conduct and knowledge about insurance issues. Click on these links to access state insurance departments for Colorado, New Mexico, Utah and Wyoming.

Your insurance company and agent work closely with your insurance department to make sure you are getting the best and most fair service possible within the state's guidelines. If you ever have difficulty settling a claim, your agent should help resolve the difficulty. You also can contact your state's insurance department, for more information on your options and rights as an insurance consumer.

Q. What do I do when my property is damaged or stolen?

A. Contact your agent or company representative as soon as possible. If there is damage to your home or possessions, make "emergency" repairs to protect yourself and your property from further damage. For example, if some of the windows in your home have been blown out by wind, you may board them up to prevent additional damage. In fact, your policy covers the cost of these emergency measures.

However, before making permanent repairs, call your agent. The insurance company has the right to inspect the property in its damaged condition. They may want to send a claims adjuster or have you get an estimate from an independent contractor.

If your property is stolen, notify the police immediately and call your agent or company representative.

Q. What if I am sued or found responsible for injuring another person?

A. Liability covers bodily injury and property damage to others due to your negligence. The coverage applies to non-auto accidents that occur either at your residence or off the premises. You may owe medical expense payments, such as first aid, to the injured party. Should you be sued as a result of your negligent actions or suspect that you might be sued, contact your agent or company representative immediately.

Q. What should I look for in an insurance company or agent?

A. Agents and companies are there to help you. At the most basic level, any agent or company representative should be able to answer all of your questions about insurance, provide you a thorough assessment of your insurance needs, and offer you a choice of insurance products to meet those needs. Also, any insurance agency or company should provide you with prompt, quality service in the case of a claim.

Just as important is the level of professional confidence and personal comfort you feel with the company representative or agent.

A sometimes overlooked, factor to keep in mind is that there are two kinds of insurance agents and two kinds of insurance companies. There are companies who sell insurance directly to you (i.e. by 800 number or internet) and there are companies who sell insurance through agents. There are also two different kinds of agents: those who represent one insurance company and those who represent more than one insurance company.

Agents offering through their agencies the policies of one insurance company often are referred to as "captive agents." Agents offering through their agencies the policies of more than one insurance company (but limited to companies who sell through independents) are called "independent agents."