Consider the following possible mishaps that could occur in your home:
- You accidentally leave water running in your apartment’s kitchen sink. It overflows and damages the apartment below yours.
- Your friend comes to visit your condo, trips over your kitchen rug, and breaks her collar bone.
- Your usually friendly little dog bites a caregiver at your assisted living center.
You may assume that none of these things will happen to you. However, if they do, have you considered who would be responsible for the medical bills or paying to repair the damages? If you’re a renter, it’s not your landlord — it’s you. However, if you have renters insurance, a relatively inexpensive type of policy, it’s likely that your insurance will help cover these costs.
If you owned a home for many years, the idea of renters insurance may be new to you. Here are some common questions and answers about renters insurance for older adults.
Q: My belongings really aren’t worth much. Do I really need renters insurance?
A: Even if you only own basic items, how easy would it be for you to pay to replace your TV, cell phone, all of your clothing, and other basic supplies if they were stolen or destroyed? For an average cost of $15 a month, a renters insurance policy can help you refurnish your rental unit after you’ve experienced a loss due to a “covered peril.” A covered peril is an event like a fire, that qualifies as a valid reason for your insurance to make payments for damages.
Also, you may not realize that you can choose a renters insurance policy that gives you “replacement cost” value. This means your insurance company would reimburse you for your damaged or destroyed belongings at today’s prices, no matter how old they are. For instance, even if your TV is 15 years old, your insurer would reimburse you for the value of a current TV so you can replace yours.
Finally, renters insurance covers more than just your belongings. A renters insurance policy also gives you liability protection. This means your policy may protect you in case you are found responsible for damage to someone else’s property (such as your neighbor’s ceiling after you leave water running in your sink).
Your insurer may also pay for medical bills if you’re found liable for someone’s injuries — if your normally friendly dog bites a caregiver in your assisted living center or your friend trips on your kitchen rug and breaks a bone, as mentioned earlier.
Q: Doesn’t my landlord or assisted living center’s insurance cover misfortunes like the ones listed above?
A: Surprisingly, no. Your landlord’s insurance usually provides liability coverage only in common areas (like lobbies and shared dining rooms) and damage to the landlord’s physical building (the actual home or apartment building), says the Insurance Information Institute (III).
You’re responsible for insuring the cost of your belongings inside that building. You’re also on the hook for liability claims, which could include injuries to other people or damage to their property because of your negligence.
Keep in mind that being required to reimburse someone for medical bills or property damage — even just one time in your life — can be quite expensive. You may have more difficulty paying those kinds of bills as you get older and live on a fixed income. If that’s the case for you, an inexpensive renters insurance policy can give you valuable peace of mind.
Q: My dog is tiny and couldn’t hurt anyone. Someone could really sue me for a little dog nip?
A: First, the person your dog bites doesn’t have to sue you. They may simply need a medical exam and some tests to prove that the bite isn’t infected. In that case, the injured person can rightfully ask you — or your renters insurance policy — to pay for those services.
Also, you can never really predict what might prompt someone to sue you. Attorneys’ fees can be incredibly expensive compared to the cost of renters insurance.
Q: I travel frequently and bring my most precious possessions, such as my jewelry, with me. Won’t my car insurance cover these items if I’m driving or otherwise traveling when something happens to them?
A: That’s a common misunderstanding but, no, your auto insurance doesn’t cover your belongings — even when they’re in your vehicle. If you owned a home, your homeowner’s insurance policy could help reimburse you if your belongings were damaged or stolen from your car or hotel. But since you’re renting, you need renters insurance to protect your personal items.
Q: Can I protect my collectible artwork, jewelry, and other expensive items with renters insurance?
A: Yes. That’s another good reason to have renters insurance — if you’ve taken some of your favorite (and valuable) items with you to your new rental. However, most insurers place a maximum dollar limit on how much they’ll pay for these specialty items if they’re lost, damaged, or stolen.
If you have items that exceed the covered value in your renters insurance policy, you may need to buy extra insurance “riders” to insure these particular items. However, you’ll still need to take out a basic renters insurance policy before you can add any riders.
Q: How do companies determine my renters insurance rates?
A: Renters insurance rates depend on factors such as the geographic location of the rental, the size of the unit, and the estimated value of your personal items, if you were to replace all of them. An experienced insurance agent can help you determine a ballpark estimate of the value of your personal belongings and give you a renters insurance quote based on your address.
Q: Are there any ways to reduce my renters insurance rate?
A: Renters insurance is inexpensive to begin with — averaging $15 to $30 per month, as stated above, for a standard policy.
You may qualify for a reduced rate if you purchase other insurance products, such as car insurance, from the same company. Companies often give you better prices for “bundling” several insurance policies, because it may increase the likelihood that you’ll stay with them as a customer.
You may also be able to reduce the monthly premiums you pay by choosing a higher deductible. Your deductible is the amount you must pay out-of-pocket for your losses before your insurance company begins paying.
For example, you might have a choice between a $1,000 or $2,500 deductible. A policy with a $2,500 deductible would cost less in monthly premiums than the same policy with a $1,000 deductible because you are agreeing to pay quite a bit more out of pocket if you experience a loss and make a claim.
Q: What’s the best way to make sure I’m accurately reimbursed for my personal belongings after an event like a fire?
A: Create a home inventory of your belongings as soon as you move into your rental, and update it regularly. Some people use their smartphone or digital camera and film themselves walking around their rental, getting images of their belongings. Others prefer to take pictures or make a written list of their items. Keep a copy of your personal inventory off your premises — such as in your safe deposit box or in a cloud-based internet storage system.
Whatever method you use, it’s smart to update your inventory once a year. Pick an easy-to-remember date for your update, such as New Year’s Day or your birthday.
If you have items like jewelry or artwork, you’ll need to get expert appraisals when you first take out any insurance riders (these add-on additional coverage to your policy for more expensive items) to determine their insured value. Then store copies of those appraisals offsite, along with your full personal inventory. You also may want to get updated appraisals every few years, particularly if your items tend to increase in value.
One final suggestion for renters: If you put any of your belongings in a storage unit, ask your insurer whether “off premises” coverage is included in your renters insurance policy or whether you will need extra insurance for stored items.
Also check your coverage limits (the maximum amount your insurance will pay) for your storage, and know exactly what kind of damage your insurance company covers, suggests the III. For instance, some policies cover items stored offsite if they’re damaged by theft or fire, but won’t reimburse you for damage caused by floods or mold.
For more information about choosing a renters insurance policy, consult an experienced insurance agent.