It all seemed surreal. It felt like a routine day. I left for work in the morning, but just four hours in, I received a phone call from a police officer, who informed me someone kicked my door in and burglarized my apartment.
Thoughts of ?how dare they?? and ?how could this have happened to me?? ran through my head as I rushed back to my apartment. Yet, despite the anxiety, nothing could have prepared me for what I saw: vacant spaces once occupied by my computer or television, clothes and books piled in heaps on the floor, and cabinets emptied of their contents.
Unfortunately, this is a scenario millions of Americans go through every year. In 2010, there were an estimated 2,159,878 burglaries in the United States, and 73.9% of those were of residential properties, according to the Federal Bureau of Investigation (FBI). These crimes accounted for $4.6 billion in lost property, or an average of $2,119 per person.
Fortunately for apartment dwellers, their renters insurance policy should cover items lost due to theft or any other incident. However, despite the financial risk, only 31% of renters have renters insurance, according to the Insurance Information Institute (III). Meanwhile, an estimated 96% of homeowners have insurance, the III reports.
Many renters may also not consider renter?s insurance worth the expense, or they might think because they?re renting the property that they?re not liable for any damages, said Brian Rauber, a Kansas City-area insurance agent. However, the average renter?s insurance premium was $199 a year (or $16.58 per month) in 2009, according to the III.
?A lot of renters have the perception that since they don?t own the apartment, they don?t have a financial stake,? Rauber explained. ?They?re just setting themselves up for financial devastation. If they have a fire or a burglary or theft, they?d lose every item they have.?
What is renters insurance?
A basic renters insurance policy covers a policy holder?s personal belongings within a rented unit, such as an apartment or a home. Renters insurance also includes liability, loss of use, and guest medical coverage. Personal property includes every item owned by the policy holder, such as computers, video game consoles, cameras, jewelry, and clothing. The average amount of personal property coverage is $20,000 to $30,000, Rauber said. In addition, renters have two options of personal property coverage: actual cash value and replacement cost. The basic renters insurance policy has actual cash value coverage, which reimburses the policyholder the actual value of the items stolen instead of what it was bought for.
?I don?t ever sell (policies with actual cash value) myself, but there are agents who do. If (policyholders) have ACV, that means if they steal your TV that you paid $1,200 five years ago, then it may be worth $200, and that?s how much you?d be reimbursed for,? Rauber explained.
An insurance policy with replacement cost coverage will reimburse the policy owner for the full amount they paid for the item originally, which means they don?t experience any financial loss if items are stolen or damaged.
?Make sure you have contents replacement coverage,? Rauber said. ?The difference in cost is about $5 per month more, in general.?
Liability coverage is yet another good reason to have renters insurance. This coverage provides financial protection for renters if the property they?re renting is catastrophically damaged and they?re found at fault. For example, if a renter who has insurance does something that causes a fire, which then causes major damages to the building, then the property owner will pursue the insurance company for reimbursement. However, if the renter doesn?t have insurance, then he or she will be personally liable for the damages caused.
?That?s a situation where could they be garnished for the rest of their lives,? Rauber said. ?They really are risking their financial future if they don?t have (renters insurance).?
Renters insurance also includes loss of use coverage, which helps pay for living expenses if the renter?s home is unlivable due to catastrophic damage. Lastly, a guest medical policy covers minor injuries that occur within the renter?s home. It?s not for when the renter is being sued, but instead as a good-faith coverage when the policyholder wants to pay for the other person?s medical expenses, Rauber said.
Renters may be able to get it for even less through discounts if they combine their policy with other types of coverage they have, Rauber explained.
?(Policy holders) should talk to the agent who has their auto coverage because they would in all likelihood get an auto-renter?s discount,? Rauber said, ?and that could be a pretty significant discount if they bundle them together like that.?
Source: http://www.cmn.com/2012/11/why-get-renters-insurance-a-true-story/
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