Everything You Need to Know About Renter’s Insurance

As a tenant, your landlord’s insurance policy does not cover your personal belongings in case of theft or fire damage. Renter’s insurance is not required by law but an increasing number of landlords in Colorado are including a requirement that tenants buy renter’s insurance in their leases. Most insurance companies that sell homeowner’s insurance policies also sell renter’s insurance policies, which do not include coverage for the home itself. To get the best renter’s insurance policy at the best price possible, you should shop around, comparing no less than three rate quotes. You can further save on renter’s insurance premiums by taking out a policy with a higher deductible. However, price should not be your only consideration in choosing a renter’s insurance policy. You should also look for an insurance agent or company that answers all questions you may have and takes care of your claims efficiently and fairly.

What Renter’s Insurance Covers

Renter’s insurance covers damage to your personal property from smoke and fire, vandalism, lightning, explosions, water, windstorms and other types of disaster. It also covers loss of your personal property due to theft. Renter’s insurance covers you from liability claims made by another party, including claims that you injured a person or damaged his or her personal property. Renter’s insurance may also cover additional living expenses due to fire damage or another catastrophe. Renter’s insurance does not cover damage from floods and earthquakes.

Liability Coverage

The liability coverage in renter’s insurance policies protects you from being sued for property damage or bodily injury caused by you, a member of your family or your pet. Liability coverage in a renter’s insurance policy covers both your court defense costs and court awards up to the policy’s limit if you lose the case. There is also an Excess Liability or Umbrella policy you can purchase with your renter’s insurance that offers more expanded coverage with higher limits. Renter’s insurance policies may also offer No-fault medical coverage which pays for medical bills incurred by a neighbor or friend who is injured inside your home. No-fault medical coverage in a renter’s insurance policy does not, however, cover your own medical bills or your pet’s medical bills.

Additional Living Expenses

Coverage for Additional Living Expenses, also called ALE, in your renter’s insurance policy pays for your costs of living should you need to move homes because of a catastrophe to your own home. The ALE coverage amount for a claim is determined by calculating the difference between your regular living expenses and the additional living expenses you incur due to the forced move. Examples of covered expenses under the ALE portion of a renter’s insurance policy include temporary rentals, hotel bills and restaurant meals until your home is restored and ready for you to move back in.

Types of Renter’s Insurance

There are two kinds of renter’s insurance you can choose from: actual cash value and replacement cost. Actual cash value renter’s insurance policies cover the replacement of personal property less depreciation up to the policy’s limit. Replacement cost renter’s insurance policies cover the actual cost to replace your personal property without any depreciation deduction up to the policy’s limit. Actual cash value renter’s insurance coverage is less expensive than replacement cost renter’s insurance coverage. Two additional ways that renter’s insurance policies are categorized in Colorado are as Named Peril or Open Peril policies. Named Peril policies cover you against specific events and the burden of proof is on you to show that the property being claimed was damaged or lost due to one of the Named Perils specified in the policy. Alternatively, more expensive Open Peril policies cover any event not explicitly excluded by the policy and the burden of proof falls on the insurance company to show that a particular claim is excluded from your policy.

How Much Renter’s Insurance Coverage to Buy

To determine how much renter’s insurance coverage to purchase, you need to calculate the value of all the personal property you plan on covering under the policy. The property may include clothes, appliances, utensils, furniture, electronics, bedding and towels. One easy way to do this is to compile a home inventory of all your personal possessions and estimate their total value, which can also be useful if you ever need to file a renter’s insurance claim.

How to File a Renter’s Insurance Claim

If you have renter’s insurance and experienced a covered event, contact the police first to file a police report for the incident. Then, you can present the police report to your insurance agent and get questions answered about whether the property in question is actually covered, whether your claim exceeds the amount of your deductible, the time frame you have to make the claim and how long it will take the company to process your renter’s insurance claim. Once you notify the agent about your need to file a claim, he or she is mandated by law to send you the relevant claim forms in a timely fashion. In the meantime, make a list of all your property that was damaged or lost due to the covered event. If you have to relocate, make sure you hold onto your receipts.