The scoop on renter's insurance

If you're wondering what's the big deal about renter's insurance-like you need another way to spend your monthly paycheck?-first consider these common misconceptions:

It's cool-my landlord's covered. In most cases, a landlord's insurance covers only structural damage to the building itself-and many landlord policies don't even go that far if the damage is caused by a tenant. If you leave the tub running and it turns your floor into cardboard and dribbles downstairs, damaging your neighbor's couch, you may be liable for the whole drippy mess. If your building went up in flames, your landlord's coverage would include repairs, but only to the building, not to the possessions of tenants.

It's out of my price range. Is $10 to $20 per month too much? In March of 2002, unofficial online quotes from two major carriers produced annual rates of $147 ($12.25 per month) and $203 (under $17 monthly) respectively. Both quotes were for a fictional five-room house in Boulder, Colorado, covering the basics for "standard" personal property valued at $35,700 (the automated figure produced by one company). Both quotes had a deductible of $500 per incident, and included medical coverage for others, on-premise or off-premise. Assumptions were that the house contained a smoke alarm and fire extinguishers. For lower rates, you can raise the deductible; for more protection, you can pay more for replacement cost coverage, in which reimbursement is based on today's replacement cost rather than original value.

I'm in a great building, and I'm not worried about security. Renter's insurance extends beyond on-premise theft and hazards. If your suitcase is stolen while you're on vacation, you'll likely be covered. Same with property stolen from your car. If you're prone to barroom brawls-well, you might need more help than renter's insurance, but you'll probably be covered if you hurt someone. Speaking of injuries, you'll also likely be protected if someone slips and sprains their ankle at your annual dance-a-thon; you may even receive compensation for legal defense costs in the case of a lawsuit.

My stuff isn't really worth much. You might be surprised at how quickly all those books, CDs, and kitchen appliances add up. According to StateFarm.com, most people own more than $20,000 worth of property. Refer to the lists in this article to make an inventory of your possessions prior to contacting an insurance carrier for a quote. (Some Web sites help you with this step, such as http://www.statefarm.com/insuranc/renters/howmuch.htm.) List each item along with its year of purchase and what you think it would cost to replace it today.

Types of Coverage

Personal property coverage

As with any insurance policy, coverage varies by state, company, and type, but here are some basic examples of personal property to include in your inventory. Items not listed here may still be insurable; ask agents about
customizing your policy with more options.

Property typically covered:

Stereo systems, VCRs, and television sets
CDs, DVDs, videos, and tapes
Cameras and other photography equipment Movable appliances, including microwave oven Furniture
Sports equipment
China and glassware
Clothing
Books
Miscellaneous

Property typically covered with limitations:

Home computers
Cash, including coin collections
Checks, traveler's checks, and securities
Jewelry and watches
Precious and semi-precious stones
Comic books, trading cards, and stamps, including collections
Antiques and fine art
Goldware and silverware (theft)
Rugs, wall hangings, and tapestries
Firearms (theft)
Furs or clothing trimmed in fur
Boats or other watercraft, and related equipment

Natural hazards coverage

Again, natural-hazard coverage varies by state and company, but most policies protect your property against losses created by the following:

Vandalism
Water damage from failure of plumbing or appliances
Frozen water pipes
Hail
Windstorm Smoke
Explosion
Vehicles or aircraft

For a higher premium, most insurance carriers offer options to add coverage for hazards not included in a standard renter's policy:

Earthquake, landslide, or other damage caused by movement of the earth
Water damage cause by an underground source or flooding
Nuclear-hazard damages

Questions to Ask Your Insurance Carrier

Will your insurance cover any property shared by your roommates?
Which items should you take photographs or videotapes of?
What are the limits on specific categories of personal possessions?
What optional coverage is available, including for satellite dish and portable cellular communication systems?
What is the price and protection difference between "replacement cost coverage" and "depreciated cost coverage"?
How should you value fine-art objects?
What circumstances are covered in your personal liability?
What circumstances are covered in the medical coverage for others?
Will you be notified before any rate increases because of policy changes or inflation?
If your building were damaged or destroyed, would you be compensated for interim housing?
How much protection would you have if your home were damaged or destroyed because of an action by yourself or a guest?
Will your personal liability include defense costs in the case of a lawsuit filed against you?
What will your off-premises coverage include, for both personal property and medical liability?
If you're planning to be married, is protection provided or available to cover the value of gifts?

Remember that insurance is about your protection against unforeseeable circumstances. Even if you think "it can't happen here," paying the price of one music CD a month might someday make the difference between an empty
house and a replacement-shopping spree.

Sally Anderson is a writer and editor based in Seattle.

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