Insurance is designed to offer peace of mind, but there is a reason why your policy has all these fine print: you may not have the coverage you expect. Like any other insurance policy, tenant insurance has exclusions and knowing them in advance can help you avoid unexpected bills in a disaster.
Just as important, however, is knowing what IS covered. All the fine print on your policy probably includes coverage you didn’t expect, which could save you money in the future.
Covered: belongings outside your home
Most renters know that insurance covers personal belongings inside their home, but they may not realize that their belongings are also covered off-site, including when traveling. Barbara Madvin, an insurance broker at Gaspar Insurance Services, says vehicle break-ins are some of the most common insurance claims she sees for renters. Although car damage is generally covered by the car policy, the renter’s insurance pays for items stolen from the vehicle, provided the amount exceeds the deductible.
Your tenant policy will also cover your belongings if you move them from your home to a storage unit, a friend’s home, or anywhere else to protect them from a covered disaster. In the event of a forest fire or hurricane evacuation, this can be particularly valuable, according to Christine G. Barlow, a chartered accident insurer. This coverage usually lasts 30 days.
Covered: maintenance charges if your rent is uninhabitable
While your home is undergoing repairs due to a fire or other covered disaster, your insurance company usually pays you to maintain your normal standard of living elsewhere.
A “normal standard of living” is broader than you think. For example, if you live in a rented house with a pool that you use every day, “the carrier needs to put you somewhere where you have access to a pool,” says Barlow, who is also editor in chief of FC&S Expert Coverage Interpretation, a commercial publication. If you have pets, your insurance company must find accommodations that accept pets or host animals where you normally would.
Not covered: common disasters
Most tenant insurance covers your property only in the case of specific scenarios or “identified hazards” listed in the policy – things like fire, theft and wind. “If something is not mentioned on that list, there is no coverage,” says Barlow.
For example, flood damage is almost always excluded from tenant policies and must normally be purchased separately. (One exception: USAA, which serves military families, includes flood coverage with standard tenant policies.)
Not covered: new things
Madvin recommends asking if replacement cost coverage is included in your policy. Otherwise, your belongings are covered only by the depreciated amount, which is often not enough to buy new parts.
Say your 10 year old TV is stolen and the replacement cost is not included. “The operator will say:‘ OK, you paid $ 1,000 for it 10 years ago; we will give you $ 250 for it now, ‘”says Madvin. With replacement cost coverage, you will receive enough to buy a new TV.
Not covered: expensive valuables
Most tenant policies cover jewelry and other expensive items only up to a specific limit stated in the policy, typically $ 1,000 to $ 2,000. So if you have an expensive engagement ring, for example, Madvin and Barlow recommend adding a separate cover for it. An assessment is usually required.
How to avoid surprises
Before purchasing renter insurance, make an inventory of your belongings. “Most tenants underestimate the amount of things they own,” says Barlow, which can leave a gap in coverage. Barlow recommends using the Encircle app to upload photos of your belongings and estimate their value. Other similar apps include Sortly and Allstate’s Digital Locker.
Read your policy thoroughly. Barlow suggests marking it with what is covered in green and what is not in red. Madvin advises paying special attention to policy endorsements, which are usually supplements or exclusions from standard coverage.
Were you confused by all the legalese? Look for a specialist. Discussing your options with an insurance agent or broker can ensure that you understand the policy you are buying. “Unless you really know insurance,” says Barlow, “it’s very easy to lose the coverage you need or not realize that something is not covered.”
A woman walks next to an “For Rent” sign in an apartment complex in Palo Alto, California. Many tenants are not familiar with the pros and cons of renters insurance policies, but what they don’t know can cost them money.