So you’ve got home and auto insurance coverage, plus health, life and disability insurance. What about personal property insurance… is this necessary? Well, it depends.
We were renting an apartment with 3 bedrooms in what my wife and I considered a great building in a great location in our small city. The manager assured us that the landlord had insurance covering most incidents but unfortunately for us, he neglected to mention that personal property was not protected by the renter’s insurance. We only found out about this after a particularly violent storm broke the small dome on top of our living room, and water came pouring in. Sadly, it damaged the carpet, our furniture, and an expensive piano my wife had practiced on for the last 10 years.
Our Landlord’s Insurance Wasn’t Enough!
Landlord insurance covered only structural damage — the glass part of the dome, and the carpeting that was already there when we moved in and nothing else! My wife was incensed, but the fault was ours for not verifying the extent of the renter’s insurance. Was it too expensive to buy additional insurance? No, the personal property insurance is actually quite affordable: between $15 and $25 a month. We could have played with the deductible to pay less, or we could have decided to pay more for replacement coverage, instead of the original cost (the piano for example would cost more after 10 years). But alas, it was too late for us this time.
Image from propertyabroad.
Should You Get Personal Property Insurance?
You’ve actually got some property coverage through your homeowner’s or renter’s insurance, but as our story can attest, there can be gaps in the coverage. Make sure you aware of those limits, that you know the difference between cash value vs replacement value and that you know which specific items are indeed covered in your policies.
Before you get insurance, take stock of the valuables in your apartment; take a photograph of the antique piano, of the 100-year old chair your aunt Martha left you (attach the expert valuation), of the beautiful Victorian bed and of the valuable Rembrandt paintings (OK, maybe they are copies, but still), and write down the value of every item for the insurance company. You’d be surprised how it adds up very quickly. It is estimated that most people have at least $20,000 of property in their apartment.
Now if you cause the damage, e.g. if your tub overflows and the water leaks into the downstairs apartment, that’s your neck in the vise. So it pays to have your liability insurance to cover other risks also, such as a person getting hurt while in your apartment, or slipping on your welcome mat and breaking a leg (even if he was drunk after your party ended). It might even cover the lawyer’s fee and court expenses in case of a lawsuit (given the national passion for initiating frivolous lawsuits to make an easy buck).
Read The Fine Print
Property insurance will typically cover furniture, cameras, TV sets (“especially” the 70″ flat screen; how did you get it up the stairs?), appliances, clothing and sports equipment. But check with the insurance agent to see what it might not cover. If you have a $50,000 diamond, you’d better insure that separately. Check also if the policy covers water damage or fire (you’d better have a fire extinguisher available on the premises). It is also an excellent idea to purchase a small safe that is water and fire proof for your most valuable documents: no insurance will pay to replace your passport.
So never take anything for granted. My father always reminded me that assuming is a very dangerous activity. For example, are so-called Acts of God such as earthquakes, underground surprises (where the earth opens suddenly), or radiation or toxic leaks from a neighboring plant (rare, but it’s happened) covered by your insurance carrier? It really won’t cost you much to seek coverage against the unforeseen.
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{ 16 comments… read them below or add one }
I feel like the subhead “Renter’s Insurance Isn’t Enough!” is misleading. Perhaps a better title would be “Your Landlord’s Insurance Isn’t Enough!”
Renter’s insurance is what you have now, as well as what we have — through an insurance company, it covers personal property with a deductible against most acts of God. Your landlord’s insurance would be very unlikely to ever cover your personal property; it’s designed to insure their property only.
Also, you touched on this briefly, but if you have valuables, get them *named* on the insurance. You don’t necessarily have to insure “separately”; just make sure the insurance company has a separate page or two on file in your account detailing these valuables. Getting them appraised may be a worthwhile step in many cases. For electronics, a dated receipt usually works.
-Erica
Erica, thanks for pointing it out — although it’s been a while since I’ve been a tenant, I agree that we shouldn’t be mixing up landlord’s and renter’s insurance. I do appreciate the clarifications you’ve made. Renter’s insurance and personal property insurance for the most part, cover the same things here.
It is also important to document as much of your personal property as possible. This includes taking pictures, document serial numbers and even a video of your apartment/condo as the insurance company will push back on as much as possible. It would have been nice if they would have talked about whether your insurance covers the depreciated value or the full value. That is another tricky one you have to be careful about. Is your two year old TV worth 600 bucks or the depreciated 150.
If you look at the cost of your renters insurance, the personal property is not what is the most expensive but the liability coverage. Same with your auto.
Also if you own a home and have a claim, having your personal property documented will help get everything replaced.
There is nothing worse than discovering you’re not adequately insured, AFTER the mishap. Reading the fine print makes a lot of retrospective sense, so do make sure your broker or insurance agent puts you in the picture properly, otherwise you might just end up losing out when you thought you were covered.
the apartments i’ve rented have actually required that you have proof of renters insurance before allowing you to move in.
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Ive been in the Insurance Restoration Business for 20 years. One of our main areas is water damage. My business has handled well over 10000 water damage claims and every so often.
We often come across tenants that have no Personal Property Insurance and they always regret not having it. It’s quite inexpensive as you pointed out. If you have an area of the apartment that is below ground such as a finished basement, it pays to get extra coverage covering this because a standard policy will not cover ground water that seeps into a basement.
I’m just glad to know that I have absolutely nothing of value in my apartment. Most of my stuff is crap I’ve found amusing over the years.
I agree, it is really important to take the responsibility and read the fine print since the shady parts of the contract tends to hide there. And insuring high cost items on their own can really save you a lot of headache.
Great advice. Making sure you are covered in all areas is important!
Yes, reading the fine print is imperative to understanding the entire document. Usually, the limitations and conditions are defined there.
Agreed. Many important and generally obscure agreements are hidden in fine-print since this is frequently overlooked by those signing contracts.
As most of the other commentators said, read the fine print. There’s almost always something horrible hidden in there!
You can find really affordable renters insurance – especially if you bundle it with your car, health or life insurance. It’s usually $10 or $20 a month. You can get covered for all your personal items if damaged in a fire or natural disaster and if someone is injured in your home you can get medical bills paid for and legal fees if needed.
Unfortunately insurance is a necessary evil. It’s one of those things that you hate to pay for, but when you have a car accident or your home is damaged in some way you will be thankful for the insurance coverage.
A good point was made, don’t just go out and get the bottom dollar insurance policy trying to save a few bucks. You may find that when the time comes that you need to make a claim on your insurance that whatever got damaged is not covered, that would be unfortunate.