Jeffrey Johnson is a legal writer with a focus on personal injury. He has worked on personal injury and sovereign immunity litigation in addition to experience in family, estate, and criminal law. He earned a J.D. from the University of Baltimore and has worked in legal offices and non-profits in Maryland, Texas, and North Carolina. He has also earned an MFA in screenwriting from Chapman Univer...

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Written by Jeffrey Johnson
Insurance Lawyer Jeffrey Johnson

Joel Ohman is the CEO of a private equity-backed digital media company. He is a CERTIFIED FINANCIAL PLANNER™, author, angel investor, and serial entrepreneur who loves creating new things, whether books or businesses. He has also previously served as the founder and resident CFP® of a national insurance agency, Real Time Health Quotes. He also has an MBA from the University of South Florida. ...

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Reviewed by Joel Ohman
Founder, CFP® Joel Ohman

UPDATED: Mar 31, 2020

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A renters insurance policy typically covers the costs of damage and theft to personal property. It provides protection against legal judgments. In the event that a guest staying in your home is injured because of a fall or another related event, renters insurance protects you against medical costs. In addition, renters insurance reimburses policyholders for relocation costs associated with securing temporary lodging.

Many renters have misconceptions about insurance for rental properties and low-income rentals. They may believe the insurance is unnecessary because they feel that the landlord already has an insurance policy on the residential building. But the renter’s insurance and residential property insurance are two different policies covering different types of property and different people’s interests.

Apartment and house tenants need renters insurance to not only cover theft and damage to their personal property, but also in case a guest suffers an injury. Renters insurance planning should be a priority in all homes including low-income apartments. Those in low-income rentals should consider that they are harder hit than most when things go wrong and so should make the decision to proactively compare renters insurance rates just like homeowners would be wise to compare home insurance rates.

Coverage Options – Cash Value and Replacement Cost

There are two types of renters insurance coverage under this option. They are the following:

  • Cash value insurance coverage
  • Replacement cost insurance coverage

Personal property depreciates in value over time. When purchasing renters insurance, it is important to consider how much the property will be worth in the present market. The fair market value of an item is not the same as the original purchase price. Most insurance carriers calculate fair market value as the replacement cost, less depreciation. Here’s the model:

Replacement cost – cost of depreciation = fair market value

In addition, most policies for cash value coverage allow for items to be replaced, but not with new. Standard insurance carriers generally price their premiums lower for cash value insurance coverage because the cost to pay fair market value is less than the cost to replace with new.

On the other hand, premiums for replacement cost insurance coverage tend to be higher. The insurance carriers cover personal property items at the same cost to acquire them again. Renters pay fair market value for a new replacement item of like kind and quality.

Optional Renters Insurance Coverage

There are limits to how much insurance carriers will cover on higher-value items. Standard insurance carriers set a limit on categories of items that have higher values such as jewelry and furs. The amount of coverage you purchased depends upon the appraised value of the item.

Most subscribers to renters insurance choose to raise their limits by purchasing optional coverage. This type of insurance covers items that are more valuable, such as computers and other types of high-priced electronics and belongings. Many choose to “schedule” high value items, covering each that typically fits into one category, most often seen with jewelry. Research this insurance option and sit down with an insurance agent to find out if you should purchase this kind of insurance.

Documenting Your Personal Property

A renter’s insurance policy allows policyholders to protect their belongings and recoup costs for property theft, water and fire damage. To assess the value of their property, low-income renters should perform a home inventory to calculate total value before purchasing a policy. Most insurance carriers provide a downloadable online inventory tool that renters can print out and check off. Consider the following steps while assessing and calculating the value of all personal property:

Step 1: List all valuables.

Valuables include all types of electronics (i.e., cameras, desktop computers, laptops, and other processing equipment), expensive clothing, jewelry, baseball collections, hand held game toys, and other high-price ticket items.

Step 2: Include receipts.

When possible, attach receipts to the list or keep them in a box with the insurance policy. Receipts provide verifiable evidence that you own the personal property. In the event that you don’t have all of your receipts, refer to bank statements.

Step 3: Take pictures.

The most important thing you can do to document your personal property is to take pictures for your apartment renter’s insurance carrier. Specifically, take pictures of more valuable items from all angles. Make sure to take a picture of the bar code information and any other identifying data.

Once you have photographed each item and created an itemized list of the property, keep them safe in a fire safe box or electronically through a backup service online. This way you will always have a record of your property in the event of a fire or flood.

Flood Insurance Coverage

It is important to understand that the standard renter’s insurance policy does not cover flood. Flood insurance can be purchased to reimburse policyholders for property damaged by flood and for the cost of temporary living expenses like hotel charges or food expenses while the apartment is being repaired after a flood.

Liability Coverage

Standard insurance carriers offer liability coverage for renters as well. This type of insurance covers legal fees, judgments, and court-ordered damages. The insurance covers only up to the limit of the policy maximum. For low-income renters who have a personal checking or savings account, personal property such as a car, liability coverage protects them from court costs, third-party liens and other expenses related to a lawsuit.

Medical Insurance Coverage

Medical insurance coverage protects renters for the medical expenses of guests who may be injured while on the premises. All costs must be necessary and medically related. In addition, the injury has to occur within the home or on the subscriber‘s property. Medical insurance coverage typically reimburses costs to subscribers, up to a given maximum amount, for the following items:

  • Medically expenses
  • Diagnostic testing
  • Dental
  • Ambulance services
  • Hospital stays

Finding Renters Insurance Quotes

Considering all the things that can go wrong, potentially leaving you with no money to pay rent, low-income renters are wise to buy renter’s insurance. The cost is low, but the benefits are high and can save renters from eviction by covering the financial cost of personal property losses like theft, water damage or flood and court costs associated with defending a law suit, or claim for medical expenses. Enter your zip in now for free renters insurance quotes online!