Credit: Shutterstock photoMore tenants than ever are buying renters insurance but are they reading the fine print and fully understanding their coverage? Without reviewing the details, they might unknowingly be underinsured or have coverage they didn’t realize they had.
Renters insurance policies are fairly straightforward. They cover a policyholder's personal property, give them liability protection and pay for loss of use expenses, in case their rental home becomes uninhabitable. However, renters need to be aware of some little-known details and nuances between some policies.
Limits Of Personal Property Coverage
When a renter purchases renters insurance, they choose an overall claim limit for their personal property – the maximum dollar amount an insurance company will pay to replace their belongings. This coverage is not as as simple as it might sound.
Within a renters insurance policy personal property limit are smaller limits for categories of items, such as jewelry or electronics. For example, the overall claim limit of a policy might be $15,000 but a common payout limit for jewelry and furs is only $2,000.
For renters with jewelry and furs that are not valued more than $2,000 the limit is not a problem. Frequently, after an inventory of items within categories, many people realize they exceed this category. Between wedding rings and jewelry inherited from parents or relatives, most renters find they have a need to increase this category limit.
Renters also might find themselves in a similar scenario regarding other categories.
Business Materials Are Probably Unprotected
Anyone with a home office is probably writing off expenses on their taxes and likely has some form of commercial insurance policy. Renters who don’t have a home office and keep any business supplies, materials or documents at home need to think about the financial ramifications of doing so.
Generally, renters insurance policies will only cover anything affiliated with a business up to $1,000 and that could present a serious issue for some renters.
Small business owners are probably most at risk due to this claim limit. Again, even if a renters doesn’t have a home office, they might store some supplies at home and occasionally work from there. Depending on the business and the frequency somewhere works from home, they might have tens of thousands of dollars in business-related items. That is well above what a traditional renters insurance policy would cover.
Renters Have Medical Payments Coverage
The liability coverage that is part of nearly every renters insurance policy includes coverage for medical payments, which could be incredibly valuable to a renter. The financial protection this provides a policyholder had tremendous value, especially considering the low cost of renters insurance.
In addition to covering the costs of a lawsuit against a renter and any damages they might be ordered to pay a plaintiff, renters insurance will also cover medical expenses of others. This could mean coverage for thousands of dollars in damages up to the limit of a policy (usually, $100,000 or up to three years).
Medical payments coverage will take care of the expenses for hospital stays, surgical procedures, x-rays, dental procedures and other costs.
Little-Known Coverages Included
Along with the primary coverages provided by renters insurance, there are other expenses that renters insurance will pay for.
Debris removal (if necessary after a covered loss) is covered by renters insurance, as well as the cost of any emergency repairs. Emergency repairs usually mean any change that must be made to a structure to secure it. For example, a window or doorway might need to be boarded or repaired after a break-in.
Some renters insurance policies also cover fire department service charges (usually up to $500) and any alterations or additions to a home a renter might make, although those are not common.
The article Details Buried In The Fine Print Of Renters Insurance Policies originally appeared on ValuePenguin.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
