What exactly is renter’s insurance and do you need it for your apartment?

Moving into your own apartment for the first time is a thrilling experience, but it can bring up a whole slew of questions you’ve never had before. You might ask yourself, “What size shower curtain do I get?” and, “Do I REALLY need a meat thermometer?” Adulting is such a trip, we know. There is also the question of renters insurance. Perhaps you’ve heard about it from a friend or your auto insurance company and want to find out if you actually need it. If this type of personal property coverage is something you’ve been curious about, we’ve got the lowdown.

Basically, renters insurance acts as a financial cushion for those who rent, rather than own a home or apartment, if personal property is stolen or damaged. This coverage also applies to whether the renter has to temporarily move out due to damage to the living space caused by a covered loss and may also provide financial protection for a renter if a guest or visitor is injured in the renter’s living space. Sometimes leases require you to get renters insurance, too. To learn more, we asked Pete Ducich, Head of Product Development at Farmers Insurance, to school us on all things renters insurance.

What exactly does it cover and up to how much?

Pete Ducich: Renters insurance is principally used to cover the cost of personal possessions that could be damaged, destroyed or stolen as described in a renter’s individual policy. Insurance policies will vary by company and most policies can be adapted to meet most individual’s needs – including the offer of different coverage amounts based on the type, value and quantity of personal property involved. It may also cover personal liability in the event a guest or visitor is injured as a result of a renter’s personal negligence. Lastly, renters insurance may cover additional living expenses to help a renter maintain a normal living standard should they have to vacate their living space due to a covered loss. In all of the above cases, specific dollar amounts of coverage, as well as personal deductibles, vary based on individual need/preference.

Why should someone consider purchasing it?

PD: Renters insurance is designed to help renters when unexpected and unwanted surprises pose as a financial burden. Often, individuals underestimate the value of their belongings, which can be very costly to replace — all the seemingly “little” things people own do add up. Also, renters need to understand that many rental agreements make clear that property owners and landlords are often NOT responsible for damage or destruction of a renter’s personal property, even if it occurs on the rented property. Unfortunately, renters often find this out only after suffering a costly loss. Reviewing coverage options with a local insurance agent prior to signing a rental agreement can help assure unpleasant surprises are kept to a minimum. Consumers should be aware that each insurance company’s policy is unique, so coverage options and covered perils may vary. Renters should discuss their individual needs and concerns with a local agent to better understand their options.

Are pets covered under renters insurance?

PD: While injury to another person by an insured renter’s pet is covered under typical policies, general insurance for the health of the pets is not. However, Farmers Insurance, in collaboration with Pets Best, does offer a separate pet health insurance plan with a wide range of benefits and options for dogs and cats.

Are laptops covered under the plan?

PD: Laptops and other computer equipment is generally covered, if stolen or damaged by a covered peril, both inside and outside the home under renters insurance. That said, computer equipment and other technology usually has a special limit on the amount that will be covered. There may also be special limits if the computer equipment is used for business purposes. Special limits on certain types of personal property are just some of the reasons renter should discuss their individual circumstances with an agent. In many situations, an experienced agent may be able to offer increased coverage amounts or an endorsement expanding coverage for certain types of personal items to provide additional coverage.

Do you get any kind of tax-related exemptions with this coverage?

PD: Though renters insurance does not warrant tax-related exemptions, those who choose to purchase a renters insurance policy can generally save money if they bundle their auto and renters insurance plans with the same company. Purchasing a renters insurance policy is a good way for an individual to establish their insurance history, prior to purchasing their first home and subsequent home insurance.

How should someone prepare for a worst-case scenario? Should they make some sort of list of their possessions?

PD: Aside from insuring their possessions and covering potential financial burdens through renters insurance, individuals should absolutely keep an up-to-date catalog of their belongings, including pictures of personal property to ensure proper and complete replacement or reimbursement in the event of a covered loss. A good first step in developing a home inventory is to use a smart phone or tablet’s photo or video feature to capture images of furnishings and other personal belongings in every room. Be sure to download and save the images and video on a hard drive away from home or in the cloud.

Sounds like renters insurance is a pretty good thing to consider, but too bad it probably doesn’t cover if your roommate steals your pizza!