As many Northeasterners learned from Hurricane Sandy in 2012, a natural disaster can strip you of your worldly belongings without warning. Similar lessons have recently resounded all around the country, from wildfires in Colorado to major blizzards in the Midwest.
And many renters are unprepared.
Generally speaking, your landlord’s insurance will cover repairs to the property, but not your belongings or the cost of living elsewhere if you have to leave during repairs. (Your landlord is only responsible to you if he was aware of unsafe conditions and didn’t fix them in a reasonable time frame.)
For roughly $300 a year, however, a basic renter's insurance policy will cover about $50,000 in property damage.
As with all insurance policies, renter’s insurance covers certain things and not others. We spoke to real people who benefited from renter’s insurance to learn what they were most grateful for.
Here are seven times you need renter’s insurance, and seven loopholes to watch out for:
You need renter’s insurance …
1. When There’s a Disaster
Renter’s insurance will cover property damage caused by fire, smoke, windstorms, lightning, explosions, electrical surges, snowstorms and certain kinds of water damage. It’s tempting to think you don't have anything valuable enough to require insuring, but think about all the little things. How much would it cost to replace your dining room table? Your microwave? Your bed? Your work wardrobe? Your winter boots?
In the final year of her MD/PhD program, Christine Tsien Silvers moved to a temporary place and stored 80% of her belongings in her basement. When nobody was home, a washer hose broke, resulting in 12 or more inches of water in the basement. "My renter's insurance covered the replacement cost of all my things that got ruined," Silvers says.
To gain a sense of how much your all items are worth, play around with this home inventory tool.
2. When Someone Breaks Into Your House
Standard renter's insurance policies also cover your belongings in case of theft. When Beth Lacey Gill first bought renter’s insurance, she says, “I felt like it was wasted money.” But then, when someone broke into her house and stole her laptop, TiVo, camera equipment and jewelry, she says, “I was so lucky I had it.” Her insurance company covered a portion of the damage immediately and paid the remaining costs after she bought replacement items, including a new laptop with all the software it needed.
To make things easier on yourself down the road, take photos of any expensive items, like a TV or computer, to use later as evidence.
3. When Someone Vandalizes Your Place
Whether a burglar smashes things or an estranged lover breaks into your home and wrecks all your belongings, renter’s insurance will typically help you cover the cost of items damaged by vandalism.
4. When Someone Steals Your Stuff … Even Away From Home
Your belongings aren't only protected in your home, but also if they get stolen outside the house. Krista Van Lewen had two expensive bikes and some stereo equipment stolen from a garage and a storage room in San Francisco. “I was thrilled to only have a $100 deductible in order to replace that [$1,500] bike,” she says.
The same thing happened to Carl Hultgren, an avid cyclist. Both of his bikes were stolen from his business, and renter’s insurance covered them both. “I went through a pretty simple process and within a month, I got a check for $9,000,” he says. “I am very thankful that my wife added the insurance to her auto policy!”
5. When You Have to Stay Elsewhere While Your Home Is Being Fixed
Where are you supposed to go if your place is no longer livable during repairs? Renter’s insurance will generally cover your housing costs if your rental unit is damaged and you have to live elsewhere in the meantime.
In 2007, Barbara Adolph was renting a cabin that was struck by a fast-moving forest fire in California. “My place did not burn, but I was evacuated for days and had lots of smoke and soot damage,” she says. “Renter’s insurance was great and paid for my out-of-pocket expenses and to clean my place.”
6. When Someone Hurts Himself at Your House
Renter’s insurance can cover your legal liability, as well. If someone gets injured at your home, your policy will likely cover the claimant’s medical expenses and costs from any resulting lawsuits. Generally, renter’s insurance will cover your legal expenses and any court reward up to $100,000.
Jim Angleton was helping his daughters move into their first post-college apartment in Tallahassee, Florida, and their renter's insurance was already in effect. The apartment didn't have an elevator, so they had to get everything up two flights of stairs. When he helped his daughter move a cabinet, he says, "she lost her grip and the entire piece began to rest upon me." As a result of the weight, Angleton clenched his teeth and heard a pop. His tooth was split in half and he had to have emergency oral surgery. His medical costs were $7,500, but he was 100% covered under the accidental medical coverage of his daughters' renter's insurance policy.
7. When You Damage Someone Else’s Property
The liability protection doesn’t end with what happens in your home. Your policy covers you if you damage other people’s property—like, for example, if you break a neighbor’s window while playing baseball in the street.
As with most insurance policies, there are also some exceptions and loopholes you should know about:
1. Earthquakes, Tornadoes, Hurricanes and Floods
Many policies specify that they won’t cover losses from these particular natural disasters, especially if you live in an area prone to them. As many Northeasterners learned after Hurricane Sandy, if the storm has hurricane-force winds when it hits your house, you could be faced with a large “hurricane deductible.”
As a rule of thumb, if you have water damage from above, like rain leaking from your roof or your upstairs neighbor’s bathtub overflowing, you’ll be covered. If, however, the water comes from the ground level, like storm surge or ground flooding, you’re probably not covered by standard renter’s insurance. For additional coverage, you might need to purchase flood insurance, which you can do at FloodSmart.gov.
2. Cash Value vs. Replacement Coverage
Some policies will pay the full cost of what it takes for you to replace your lost items. Other policies, however, only pay the actual cash value of your lost items. In the latter case, if you paid a few thousand dollars to buy a nice sofa a decade ago, the policy might only pay you a few hundred bucks—because that’s how much your ten-year-old sofa is worth these days.
3. Home Businesses
Most policies don’t offer much coverage for business equipment. The upper limit for home business equipment is often $2,500. If you have expensive computers, scanners or other devices in your home office, you might want to pay for additional coverage. And if you store inventory for your business at home, you will probably need an additional rider to insure your inventory sufficiently.
4. Liability for Certain Dogs
Generally speaking, if your otherwise friendly Labradoodle attacks someone in your home, renter’s insurance will probably cover the liability. If, however, you have a “high-risk” dog breed like a pit bull, you may have a hard time finding coverage or need to buy extra insurance.
5. High-Value Property
Most policies won’t cover more than $1,000 in jewelry, so if you’re looking to cover your diamond engagement ring, you should probably seek extra coverage. You can usually buy a rider or floater on your policy to cover your additional jewelry. (Note that you may need to get your items professionally appraised.)
Expensive artwork is likely not to be covered in full, either. So, if you want to protect the cost of your artwork, you’ll probably need a supplemental policy.
6. A Ton of Cash
If you have a ton of cash stashed at your place (should we ask why?), most policies will only cover a small amount if it's stolen. Sometimes the upper limit is as low as $250, and most policies generally won’t cover more than $500.
Some policies won’t cover firearms at all because they have such extreme liability. For policies that will cover them, the limit is often no more than $2,500. If your firearm is worth more than that, you should buy a “scheduled personal property endorsement,” which will give each listed item a definite coverage value.