What Does Renters Insurance Not Cover?

Wednesday, July 26, 2017

Diving into the details of insurance policies isn’t for the faint of heart. While you may have renters’ insurance, most don’t fully understand what their policy does cover and what it doesn’t. Luckily, that’s where we come in.


After looking into the details of a plethora of renters’ insurance policies, we’ve noted what most policies will cover and what you won’t find coverage for in a typical plan. So, let’s take a closer look at renters’ insurance and truly find out what you’re covered for.


What is Renters Insurance?


First and foremost, we must understand what renters’ insurance is before going any further. Renters insurance is a common coverage that people renting apartments and homes take out. Many landlords even demand a renter have such coverage.


The policies protect against personal property damages and losses while renting, along with providing liability coverage to the policyholder in the case of an accident. The coverage can also pay your expenses when the property you’re renting becomes uninhabitable for whatever reason.


Most insurance agents agree that renters’ insurance is a mandatory coverage for individuals who rent their homes, as most people have more personal property than they think. Certain statistics state that the average person who rents a home has over $35,000 in belongings that wouldn’t be covered under other insurance policies in the event of damages. That’s where renters’ insurance proves valuable for many.  


Common Coverage in Renters Policies


Before we dive into what is not covered by these policies, it’s important to look at common coverage options in renters’ insurance policies. Here are a few things that tend to be included in these types of plans:


  • Fire damages: If anything in the rented property is damaged due to fire, your policy will kick in and cover you.


  • Theft: If any of your personal property is stolen, the policy will offer protection.


  • Vandalism: Renters insurance also covers costs related to vandalism.


  • Medical Payments to others: If you cause injury to another person in the unit, your renters’ policy will protect you – but only if you get medical payments added to the coverage.


  • Property damage liability: If you cause damage to another person’s property, your renters insurance will typically kick in.


  • Personal property protection: Things like smartphones, laptops, and bikes can all be protected by a renters’ policy – no matter where the damage occurs.


  • Uninhabitable costs: If you’re forced to stay at another location because the place you’re renting becomes uninhabitable, then the policy will pick up costs, even indirect ones.


This is just a small sampling of what a renters’ insurance policy can or will cover. However, there are things or clauses that may confuse individuals within these policies. Not everything is covered.


What Does Renter Insurance Not Cover?


While renters’ insurance offers a lot of coverage, it doesn’t cover everything. You need to know the ins and outs of any policy before you jump in. For example, here are a few things that most basic renters’ insurance plans would never cover:


High Priced Items


All basic renters’ insurance policies have limits on how much coverage you’ll receive. No high-priced item will ever fall into these limits. Things like expensive jewelry, collectibles, art, and high-end electronics won’t be covered by a basic renters’ plan.


If you want to protect your high-priced items, then you’ll need to get a separate insurance policy for the valuables. This is called scheduling items. To do so, make sure you get each item appraised by a professional before you get the policy. Going by your own estimations is a surefire way to pay too much or too little for such policy.


Natural Disasters


While renters’ insurance offers fairly comprehensive coverage, there are still a few gaps. Mainly, you won’t be covered if a natural disaster strikes your home. Renters insurance does not protect against any type of natural disaster.


Let’s look at some examples. If you live in Florida, you may want hurricane coverage to go along with your renters’ policy. If you live in California, earthquake coverage may be important. Things like wildfires, sinkholes, or tornados are not covered, either.


Damages You Create


If you throw a huge party for the 4th of July and someone ends up with a serious injury, you could be personally on the hook for medical expenses and/or legal fees. Renters insurance does not cover damages you created.


However, you can add an umbrella liability policy to your auto insurance policy, if your liability limits are at least $250,000/$500,000, or a combined single limit of at least $300,000. This umbrella policy will go nicely with renters’ insurance, if you feel you need it. For renters who love to host events and get togethers, an umbrella liability policy should be a mandatory add-on to your insurance portfolio.


Roommate’s Personal Items


No renters’ insurance policy will cover a roommate’s stuff. You may add family members to a renters’ insurance policy if they live with you, but non-family members are not allowed to share policies.


If your roommate wants to get renters insurance, they will have to have their own policy.


Undocumented Items


Renters insurance policies are not a free-for-all when damage happens. In fact, without proper documentation, your renters’ insurance might not do you any good. In some cases, you need to have some type of proof you owned the item you’re about to claim.


Luckily, this isn’t too difficult. Here are a few common ways to document your things for insurance purposes:


  • Keep all receipts for large purchases, especially electronics.
  • Create a file with the name, model number, and serial number of all electronics and valuables.
  • High priced items should be professionally appraised and documented.
  • Snap photos of all items with your cell phone and email them to yourself.
  • Invest in a small fireproof safe to keep files and receipts.


By doing these few things, you’ll have the documentation required when you need renters’ insurance to kick in. While this may seem timely, it’ll take about 30 minutes once you get started and can save you thousands of dollars in the long run.


Reimbursement Renters’ policies


However, if all this is too much for you, look for a renters’ insurance policy that pays out claims on a reimbursement basis. This means, that if something is stolen from your rented place, you just need to re-buy it, then email in the receipt to your insurance company. Once they get it, that is when they will reimburse you for the stolen item.  


Finding the Perfect Policy For You


Don’t delay in getting renters’ insurance. These policies start at around $10 a month and go up from there – depending on how valuable your items are. Always go with full replacement cost on all personal property and get multiple quotes before purchasing a policy.