Renters Need Insurance, Too

By Kristi Vaughan

Homeowners need insurance to protect their investment but do renters? If you own anything of even moderate value, the answer is yes.

Common Misconceptions

Too often renters assume that their belongings, or personal property, are covered under their landlord’s insurance policy. Not so, according to the Texas Department of Insurance, which says, “a landlord's insurance usually covers the building but not the personal property of the residents.”

Renters also often assume they have little of value. But take a minute to do a personal inventory. What about the stereo system, the big screen television, the computer or even your wardrobe? What would it cost to replace these items if they were lost or damaged?

One company, State Farm Insurance, estimates that the average person has $20,000 worth of personal property. And that’s just the average – you could have more.

What does renter’s insurance cover?

Typically, renter’s insurance policies – known in the insurance industry as HO4-Renter policies -- focus on personal property and liability. As with homeowners policies, this means coverage for the items you own against 16 disasters including items lost, damaged by events such as fire, or stolen.

Whether or not you will recoup all of the value of your loss depends on what level of coverage you choose. For example, an “actual cash value” policy pays only the value of what the item is worth at the time it was lost or damaged. A “replacement cost” policy, on the other hand, covers the cost of replacing the items without a deduction for depreciation.

Some policies also offer a degree of coverage if someone is injured while on your rented property.

Insurance policies in the state of Texas are somewhat different from those offered in other states. Two types of policies are offered there: the Broad Form, which covers only those losses specified and the Comprehensive Form, which covers losses from every type of event unless specifically excluded.

Where can you get renters insurance?

Renter’s insurance is offered by the same companies offering homeowners insurance. Prices will vary by company and the coverage and deductibles selected. In addition to basic coverage you may select additional coverage for valuable items or special collections. Price quotes are available through local insurance agents, insurance providers websites or you can do an Internet search for quotes.