Renter's insurance

Although it is often overlooked, renter’s insurance is an important resource for protecting one’s property and peace of mind.

Here are some FAQs:

Doesn't my landlord already have insurance?

Although your landlord might have homeowner’s insurance on your property, the coverage is mostly for the physical structure such as on the house or the condominium unit. The homeowner’s insurance may cover instances such as a leaky roof or a burst pipe. But it will probably not cover damages or loss of your personal property.

What is personal property?

Personal property includes anything that isn't part of the structure of the house. For example, furniture, electronics, clothing and appliances.

How much would renter's insurance cost?

The cost of the insurance changes based on the following things:

• The types of things that are covered by the policy,
• Whose personal property is covered such as your own, your household or your roommate(s),
• Whether the policy includes insurance for when someone is injured on the property and sues ("liability insurance"), and
• The items that the policy covers and how the insurance company determines the value.

What would the renter's insurance cover?

When you first sign up for renter’s insurance, the company would most likely ask that you create an inventory of the personal property to be covered. For instance, the insurance company may want photographs and proof of ownership of the items like electronic devices or jewelry. You should include as much detail as you can about the age and condition of the item, the purchase price, and the estimated cash value. If possible, include receipts, invoices, appraisals, and other documents that could establish the value of the item.

Depending on the policy, the renter’s insurance would either cover the actual cash value or the cost of replacement. For instance, imagine you purchased and insured a $500 television in January. Later on, in December of that year, the television was destroyed during an earthquake or some other natural disaster. Depending on your policy, the insurance company may pay out the $500 (actual cash value of the television when it was first purchased and insured), the depreciated value of the television at the time of loss, or the cost of replacing the same type and model of television or a television of similar value.

Although the depreciation or decrease of value makes renter’s insurance seem like a waste of money, renter’s insurance can be a great investment if the policy covers items that appreciate or increase in value. For instance, suppose you purchased and insured an antique rug that was appraised for $500 in January. Later on, in December of that year, the rug was damaged by a leaky roof. Unlike a television, the value of antiques and other one-of-a-kind items are trickier to assess, and harder to replace. Depending on your policy, the insurance company may pay out the $500 appraised value of the rug when it was first insured, or the appreciated value of the antique.

How do I get renter's insurance?

Most insurance companies such as Allstate, Liberty Mutual and Nationwide provide renter’s insurance. You can also consult the Illinois Insurance Association and other organizations for further information on renter’s insurance.