Index | Property Insurance | Tenant's Policy
If you are a tenant of a house, an apartment or a multi-family residence, Tenant's (Renter's) Policy is for you. Tenants run the same risks as homeowners and, therefore, need protection against the same perils. However, far not all tenants are insured or are eager to get insured through Tenant's Policy. Why? There are several reasons for this. Firstly, many people erroneously think that they are insured through the Landlord's policy and this is enough. The truth is that your landlord is interested in protecting his/her own interests, which means that your possessions, most likely, will not be covered. That is why instead of blindly relying on the Landlord's policy, it is better to clear up the details of this coverage and find out if your interests are protected.
Remember that Tenant's Insurance is usually inexpensive, but it can save you money in case of an incident. Secondly, many renters do not realize the actual value of their possessions. They turn a blind eye to Homeowners Insurance for one simple reason - they think they have nothing worth insuring. But if you think about the value of the average stuff, including clothes and food, furniture, books and equipment, the ball-park figure will be over $20,000. Isn't this a substantial sum to insure your property so that you could feel protected in case of a total loss?
You may not be interested in protecting the building as it is covered by your Landlord's Insurance, but you may need protection against damage to your property or theft of your belongings as well as liability in the event someone gets hurt on the premises you rent. Correspondingly, to meet the needs of people leasing or renting their living quarters, Tenant's Policy, also known as HO-4, provides a "package" of benefits, including Personal Property coverage, Personal Liability coverage and Additional Living coverage all combined in one contract.
Tenant's Policy basically operates under the same set of rules that apply to all forms of Homeowners Insurance. Thus, typical coverage areas do not differ from other standard Homeowners policies. These are such events as fire or smoke, lightning, windstorm or hail, volcanic eruption, snow, weight of ice, vandalism, theft, explosion, water damage from plumbing, and damage caused by falling objects. As well as Condominium Policy, Tenant's Policy usually has a special provision according to which you get reimbursed for tenants' improvements and alternations you bring to the place of living.
Under this type of Homeowners policies for renters you can confront property limitations on certain items, such as jewelry, silverware, gold, money, securities, and business property. Your car will most likely not be covered under this type of contracts. Most typically, Tenant's Policy covers sports and recreational equipment, though in case it costs a fortune there can be limits and exclusions.
When it comes to property which is away from your house, it can be liable to coverage, but the extent of coverage can be different. Most policies offer special endorsements, riders or floaters to help extend the coverage. Among the most popular are the following endorsements: Replacement Cost Coverage to fully cover the contents of your living quarters, Scheduled Personal Property to insure jewelry, expensive sporting goods, collectibles, guns and other items which are usually either excluded from coverage or set limits on, and Increased Business Coverage to protect your business.
In some states you are allowed to obtain joint Tenant's Policy together with your roommate or your unmarried partner. But you should know that the conditions underlying different policies vary and it is not an automatic provision. On average, domestic partners renting the same apartment are insured under separate policies if they are not bound by legal relations. Contrary to this, an offspring is eligible for Tenant's Policy as part of the parents' household. It is especially convenient because in case your son or your daughter leaves the family nest and goes to college, he/she retains coverage through Tenant's Policy provided he/she lives on campus and does not rent an apartment. In the latter case a separate Tenant's Policy is required.
When making a claim under this type of Homeowners Insurance contracts, as it usually is, you should be ready to specify the loss itself, the date when the loss occurred, if possible, even the time of the day, and the list of personal items damaged or stolen. As soon as you get in touch with your insurance company representative you will receive a special claim form to fill in, which is an official ground for the insurance company to consider your claim and reimburse you for the losses you have sustained.
This short overview of the scope and application of Tenant's Policy highlights the most important things to keep in mind if you are considering purchasing this type of policy. It always makes sense to compare policies offered by different companies working in the area. The prices may differ considerably. The guideline for you is to try to balance out the price and the scope of coverage. The chances are great that having done your homework and having gathered information about available options you will find a policy with rather an extensive coverage at an affordable price.
Another thing for you to consider is whether the policy is based on the replacement cost value or the actual cost value of your property. Both policy options are available. Most Tenant's Policies cover the actual cash value of your possessions, which is less beneficial for you. Ideally, it is preferable to be insured on the replacement cost value basis, though it may be more expensive. Otherwise, it is worth thinking about increasing the coverage through the replacement cost endorsement as it pays the amount it costs to replace the item today and thus allows to replace your property with "like-kind-and-quality" materials.
Carefully read the exclusions and exemptions of the policy in question. Some perils are almost always excluded from coverage (for example, floods and earthquakes). Depending on the estimated risk of a particular catastrophic loss occurring where you live as a renter, you can decide if it is necessary to supplement your policy with endorsements protecting your property against such perils.
Do not reject the policies which are offered only in combination with some supporting coverage, such as, for example, an Automobile Insurance. Such multiple policies require thorough consideration as they may offer considerable discounts. In some states this rule works in both directions: if you have an Automobile Insurance, you can get discounts on your Tenant's Policy and in the same way your Tenant's Policy can guarantee discounts on an Automobile policy.