What Does Renters Insurance Cover and How to File a Claim

Last Updated on July 28, 2021 by pf team

Renters insurance is a great way to protect your personal property, but your policy can also protect you in other ways.

How much would it cost to replace your wardrobe? What's the cost of replacing all the electronics in your home? How much is your jewelry worth? Fires, burst pipes, and other risks can all be a threat to your belongings.

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What does renters insurance cover and what are the policies

A renters insurance policy doesn't insure the building. Instead, your coverage focuses on your belongings. Two important coverage types affect how well your policy protects you.

Your policy might insure your belongings using actual cash value. Most policies use this structure. Or your policy might use replacement cost, which is less common but often an option.

Actual cash value

If your policy uses actual cash value, it means the insurer deducts value based on the age of the item.

For example, let's say you bought a sofa for $1,000 several years ago.

The insured value reflects the age of the sofa. If your insurer says the useful life of a sofa is 10 years and your sofa is 8 years old, then 20% of the sofa's value remains.

With actual cash value, a covered claim for the 8-year-old sofa might pay $200 rather than $1,000.

Most renters policies use actual cash value to determine the insured value of your property. Policies can also include a rider that changes actual cost to replacement cost coverage. A rider is just an add-on.

If you think about it, actual cash value protects your potential loss. Most things we own lose value over time. If an insurer values an item at less than we paid for it, that just means we've already used some of its value.

Nearly all auto insurance policies work the same way, insuring the remaining value.

Replacement cost coverage

If you look around your home, you can see how a policy that uses actual cash value might not protect you fully.

How old is your TV compared to its useful life? A 5-year-old TV's insured value may be half its original value.

If a fire damages your TV, you'll need to buy a replacement but your policy may not provide enough coverage to replace the damaged item. You'll find similar examples everywhere you look in your home.

Replacement cost helps with these potential coverage gaps. Instead of insuring your belongings for a reduced value, replacement cost protects your belongings for the full cost of the item if you had to replace it.

Your policy doesn't guarantee that the insurer will replace a damaged item with an exact replacement. Instead, most policies use a “like kind and quality” clause.

This means the insurer will pay to repair the damaged item or replace it with an item of similar quality.

With actual cash value, a 5-year-old TV might only be insured for half the cost of replacing it. With replacement cost coverage, the insurer pays enough to replace the TV with a similar model.

Are your valuables covered?

The coverage limit you choose applies to the total value of all your belongings. However, some types of items use sublimits, which can reduce coverage.

Items like jewelry and watches often use a lower coverage limit by default.

For example, let's say your policy has a $100,000 coverage limit. That limit applies to all your belongings.

If you have a loss for $20,000, your limit is high enough to cover the loss. What happens if part of the loss is a $10,000 necklace?

This is where sublimits come into play.

Jewelry and other valuables usually have coverage limits much lower than your total coverage limit. You might have a $1,000 limit per item with a $2,500 limit for all your jewelry.

Many insurers let you adjust this amount. For some items, you'll want a better solution. You have some options.

Often, you can schedule coverage for specific items. This means you're insuring a specific item for a specific amount. With scheduled coverage, you don't need a separate policy.

The scheduled items become an add-on to your existing policy. You can also purchase a floater policy. Many insurers call this a personal articles floater.

With a floater, you're still scheduling coverage, but you're often insuring your valuables on a separate policy. If someone steals your diamond ring, the claim won't affect your renters policy.

With scheduled coverage or a floater, the insurer covers your valuables for more risks. They also insure the item for the item's full value.

As a bonus, if you have a claim, there's often no deductible. With deductibles as high as $1,000 or more, this can be a lifesaver.

What does renters insurance not cover?

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Your insurance policy covers common risks like fire or wind. Some renters policies cover all risks. Others only cover certain risks.

Named peril policies only cover the risks named in the policy. Fortunately, this includes most common risks and even includes theft or vandalism.

All-risk policies cover all risks, as the name suggests. However, there are still some risks that aren't covered.

Every policy also lists exclusions, which are risks that aren’t covered. Below are some common risks that renters insurance does not cover.

  • Flooding: Most policies cover many types of water damage but also exclude damage caused by floods.
  • Land movement: Most renters policies exclude damage caused by earthquakes and sinkholes.
  • High-value items: If a fire destroys a $5,000 ring, a standard policy may not cover the entire loss. Adding scheduled coverage for the ring and other valuables protects you for the full replacement value.
  • Pests and rodents: Your renters policy doesn't cover damage from insects, mice, racoons, and other pests.
  • Intentional damage: Damage caused by intentional acts isn't covered.
  • Illegal activity: Insurance policies also exclude damage that results from illegal activity.
  • Water backup: Often, you can add water backup coverage but it may not be part of a standard renters policy.
  • Accidental damage or breakage: Most renters policies don't cover accidental damage to your personal property. If you drop your smartphone or spill iced tea on your laptop, your policy won't cover those risks.

How to file a claim

Insurers have plenty of experience with handling claims and can walk you through the process. However, keep these steps in mind if you need to place a claim.

  1. Put safety first. Make sure you and your family are safe first. You need to notify your insurer as soon as possible, but be certain everyone is safe before contacting your insurer.
  2. Minimize the damage if possible. There may be steps you can take to minimize the damage. For example, turning off the main water supply can prevent more damage from occurring if you have a burst pipe under the sink.
  3. Note important details. Note important details about the claim, such as what time the damage occurred, the date, and anything else that seems relevant.
  4. Contact your insurer or agent. If you have an agent, your agent can walk your through the claim process. However, your agent can't decide whether to place the claim. You can also speak to your insurer directly. The person you speak with only collects information about the claim. A trained adjuster handles the claim once you've reported the damage.
  5. Work with the adjuster. Insurance adjusters work to resolve claims quickly and thoroughly. Insurers can often settle most renters insurance claims in a day or two because the policy only covers personal property.
  6. Save receipts for expenses. Sometimes, damage to your home forces you to live somewhere else for a while. Many renters policies pay for extra expenses caused by living away from home. Save your receipts so your insurer can reimburse some or all of your costs.

Take a home inventory

Before you have a claim, take a home inventory. A home inventory is just a record of what you own.

One simple way to do this is to take pictures of your belongings in your home. If you overlap the pictures, you can build a panoramic view that shows what you own. If you have receipts for items, include the receipt in the picture.

Some people also use a spreadsheet to catalog the things they own.

When you're done, upload the photos to your favorite cloud storage. This process documents what you own and protects the data from risks like fire or water damage.

Q&A about renters insurance policies

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Here are some common questions about renters insurance.

What does basic renters insurance cover?

Your policy covers your belongings for common risks like theft and fire. Many types of water damage are covered as well.

Your renters policy can also protect you against lawsuits. In many cases, your insurer can even pay for your legal defense costs if someone sues you.

Does my landlord insure my belongings?

Your landlord's insurance covers the building but not the contents. This means that the landlord’s policy doesn’t cover your furniture or other belongings.

Liability coverage is also split. Is someone slips on a skateboard in your apartment, you’ll need your own policy to cover the risk. The landlord’s policy only covers the landlord’s risks.

What is a floater policy and do I need one?

A floater is usually a separate policy that can protect your valuables. It also allows you to insure for a fixed value. A floater policy covers more risks than a standard renters policy.

You can also use the scheduled item coverage on a standard policy to protect your valuables.

Another benefit of using a floater or scheduled coverage is that you can often avoid paying a deductible is you have a loss.

What discounts are offered on renters insurance policy?

Insurers often give discounts for buying more than one policy. If you buy renters and auto from the same insurer, you might get a discount on both policies.

Often, the discount you can earn on your auto policy is enough to pay for the renters policy. Discounts for security systems and fire alarms are also common.

Be sure to ask if your insurer gives a discount for automatic payments. In many cases, you can save money by using autopay.

Does renters insurance offer liability protection?

Yes, a renters policy provides liability protection. Coverage limits usually start at $100,000. You can often change this limit to a higher amount.

This coverage only applies to personal liability, however, such as slips and falls. If you have a business, you’ll need a separate policy to protect against business risks.

Auto liability is covered by your auto insurance policy.

Does renters insurance provide coverage when you travel?

Your renters policy provides coverage for your belongings even when you travel.

This protects your belongings against covered risks like theft when you are away from home. Your liability coverage also travels with you.

Do you need renters insurance when renting a house?

With a renters insurance policy, the policy doesn't insure the structure of your home. This makes a renters policy the right choice whether you rent a house, a condo, or an apartment.

Your renters insurance policy covers your belongings but not the building itself.

Can I add my girlfriend to my renters insurance?

Many insurance companies let you add someone else to your policy as an additional named insured. Depending on where you live, there may be other ways of adding someone to your policy.

However, adding your girlfriend or boyfriend as a named insured is often a safer path for both parties.

You can also purchase a separate policy for each person. If each person has their own car, this option might be better because you can each earn an extra discount for bundling policies.

What happens to my renters insurance if I move?

If you move, you'll need to update your policy with your new address or start a new policy. Your coverage remains in place during the move but you need to update the insured address.

Many insurers offer a 30-day grace period before you need to update your policy.

Can you be evicted for not having renters insurance?

Renters insurance is becoming a more common lease requirement. If your lease requires renters insurance, your landlord can use this as a reason for eviction if you don’t have a policy.

A renters policy protects your belongings but also ensures that you meet your lease obligations.

Bottom line

Often, you can purchase basic renters insurance for less than $20 per month. Many insurers also offer discounts if you bundle your policy with an auto policy or even a term life policy.

This can help reduce your overall cost of insurance and the discount might even pay for your renters policy.

Also, consider choosing a lower deductible when you buy a policy. Higher out-of-pocket costs can take a bite out of claim payments and can prevent you from making smaller claims.

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