New Yorkers who have gone without renter’s insurance may want to reconsider that decision after a year of wild weather that brought down trees and damaged rooftops throughout the city.
The earthquake last August would not have been covered by most renter policies, but damage from routine weather events — wind, rain, heavy snow, lightning — typically is. So are losses related to fire, smoke, vandalism or theft.
Renter’s insurance also includes liability protection, so if someone was injured at your home and sued you, your legal expenses and any court award would be covered, generally up to a $100,000 limit. Coverage often provides living expenses should you have to move out of your apartment — say, because of a fire.
Renter’s insurance is less expensive than many people realize: a basic policy costs about $300 a year for around $50,000 worth of property protection. Many renters who go without are under the mistaken impression that their landlord’s policy covers their possessions.
“As a renter, if your personal property is damaged, you’d have to have a renter’s policy to get coverage,” said John Capuano, an associate insurance examiner with the New York State Department of Financial Services. “The landlord’s policy is not going to cover your damages.”
An exception to that, he added, can occur if the landlord was “aware of a prior hazardous condition, failed to correct it in a reasonable time frame and your property was damaged.”
Renter’s insurance does not cover losses caused by floods — at least, not flooding resulting from water rising up in the streets (as opposed to your neighbor’s bathtub overflowing through your ceiling).
For flood coverage, you need a separate policy issued by the National Flood Insurance Program. And some private insurance policies also exclude hurricanes, Mr. Capuano said. Luckily for many policy holders last year, Tropical Storm Irene was not a hurricane by the time it reached New York. In addition, renter’s policies often have a deductible — meaning, for example, that the tenant would pay the first $250 or so toward replacing a stolen television before insurance coverage kicked in.
Policies differ in whether they offer replacement coverage, which pays the full cost of replacing an item, or actual cash value.
“Say you purchased a sofa 10 years ago,” said Loretta Worters, a vice president of the Insurance Information Institute, a nonprofit sponsored by the insurance industry. “Today, to buy new, maybe that sofa would cost $3,000 or $4,000. With actual-cash-value coverage, if it’s a 10-year-old sofa, they’re taking the value to be maybe $500.”
To help renters calculate how much coverage they need, the institute offers a home inventory tool at www.knowyourstuff.org. A room-by-room inventory may determine that you need more than the $50,000 or so that the basic policy offers. And while you’re at it, take photos of expensive items; they may be useful if you ever have to file a claim.
The New York State Department of Financial Services has a consumer guide to shopping for homeowner’s and renter’s insurance. It includes price comparison tables for the largest insurance providers. And Allstate has developed a free “Digital Locker” mobile app that lets you create and store an inventory of your possessions.
But while you are comparison shopping, or if you have a policy you have never bothered to read, you should make sure you understand what is not covered by a particular plan.
With most policies, there are limits on how much coverage is offered for jewelry, watches, fine art, musical instruments, guns, cameras, silverware and computers. Jewelry is typically capped at $1,000, although you can purchase a rider or floater to get more coverage. A professional appraisal may be required.
Another area that can surprise people who work at home is the standard $2,500 limit for equipment used for a business. That may not be enough for a graphic designer with an expensive computer and scanner. And using a computer for both business and Facebook updates can complicate a claim..
“You’re always going to have a shade of gray because most computers used today are for personal and business purposes,” said Jeff Calderon, a product line manager with Allstate. “If you have a home-based business, you should talk to your agent and explore the differences and limitations between a personal policy and a business-type policy.”
Similarly, personal property covered at home might not be as well protected if lost or damaged elsewhere. For instance, coverage for a laptop or other items stolen from a hotel room may be limited.
So what happens if you need to file a claim?
“You should immediately notify your company if you have a problem,” said J. Robert Hunter, the director of insurance for the Consumer Federation of America. “They should send an adjuster within a day or so, and probably within 30 days you should be able to settle.”
Mr. Hunter recommends taking notes — and names — on every conversation you have with the insurance company. If your claim is denied or you are offered less than what you think is fair, ask for a detailed explanation.
“Once they’ve told you why they’re not paying your claim or they’re not paying you fully,” he said, “they can’t come up with a new reason.” If you think you are not being treated fairly, you can file a complaint with the state Financial Services Department.
“We’ll do our best to assess whether the company is acting appropriately,” Mr. Capuano said. “If they’re not, we’ll go to bat for the consumer.”
Re-posted from the New York Times.