Renters Insurance

Even if you don't own the home you live in, it is still very important to make sure to cover the personal property contents. Your landlord will be responsible for covering the building, but as the tenant, your job is to secure a policy that provides coverage for your personal belongings. The type of policy that is appropriate in this situation is called Renters insurance, tenant insurance, or form HO4.

A renters policy has a few components:

1. Personal Property coverage

You will select a limit of coverage that represents the value your personal belongings. There may be sub-limits on certain types of property such as jewelry, guns, and money. There will be a deductible applied to any claim payments made for personal property coverage. Most insurers require that you select a coverage limit of at least $25,000, although you should exercise caution and complete a home inventory before selecting a limit. It's important to make sure that you have sufficient coverage for everything. Where possible, you should attempt to get Replacement Cost Coverage for your personal property. This means that you will be able to replace items with brand new items. Without replacement cost coverage, you probably will not receive enough money in the settlement of the claim to buy substitute items.

2. Loss of Use

If your home is damaged and unusable as a result of a covered claim, your renters policy may include a coverage that will temporarily help you cope with the increased financial burden of staying a hotel or finding alternate living space while the damage to your home is being repaired.

3. Personal liability

This coverage provides defense and pays your legal obligation as a result of a lawsuit following an injury at your home or caused by a covered member of your household.

4. Medical payments.

If a guest is hurt at your home, you might be glad that you have medical payments coverage on your renters policy. The limit of coverage is typically between $1,000 and $5,000. It is designed as a goodwill step in helping a guest recover from the financial impact of an accident. Scenario: Shirley invites her best friend Helen over for Sunday dinner. Helen offers to take the red raspberry pie out of the oven and sustains a burn when the tasty filling spills over the side of the pie plate. Recognizing the gravity of the situation, Shirley and Helen visit an urgent care facility so that treatment can be administered. Shirley's medical payments coverage pays for the visit to urgent care to treat the severe burns. Helen suggests that next time they get together, ice cream sundaes will be a better choice, and doesn't sue Shirley.