Smart renters buy insurance for belongings

October 25, 1992|By Hiawatha Bray | Hiawatha Bray,Knight-Ridder News Service

It's not your home. You only rent it.

Everything inside, however, is yours: the furniture, the clothing, the TV, stereo, home computer. One visit from the neighborhood prowler or one spark from a cigarette and it could all disappear.

That is why renter's insurance is such a good idea. For a few hundred dollars a year, you can protect the things that make your apartment livable, and renter's insurance gives you liability protection in case a visitor to your apartment is injured.

About 28 percent of all Americans rent, according to a 1989 survey by the Insurance Information Institute. The same survey found that only about a quarter of the renters have renter's insurance.

It makes no sense to independent insurance agent Lori Rau of Detroit, who notes that the typical renter owns $10,000 to $20,000 worth of personal belongings.

"It could be quite a financial burden on them if they did have a loss," Ms. Rau said. "They could lose everything."

Renters can get quite a lot of insurance coverage for well under $150 a year. Rates vary among insurance companies and depend on the neighborhood you live in and the type of apartment building.

John Little, a State Farm agent in Detroit, charges $120 a year for $25,000 in coverage for people living in apartment buildings that contain no more than eight units. If there are more units, the premium edges up to $125. The reason? The more tenants in the building, the greater the risk of something going wrong.

"There's more exposure," Mr. Little said, "more chance of a fire."

You can get more coverage if you're willing to pay more. Many renter's policies limit coverage of specific kinds of losses.

For instance, most policies include $100,000 in personal liability protection, but you can buy more.

It's also common to see a $1,000 limit on jewelry coverage and limits of $3,000 to $10,000 on computer equipment. If you own a lot of valuable gems, or his-and-hers laser printers, you may want to buy a floater. That's an add-on feature that provides additional insurance for specific kinds of property.

One thing never covered by renter's insurance is your car. Even if your rented garage burns down and takes your Buick with it, the renter's policy won't help, because cars are supposed to be insured separately.

Your car insurance may save you money on a renter's policy, however. Some insurers offer both kinds of policies and will give a discount to somebody who's already a customer.

Check out possible discounts. Many companies offer lower premiums if an apartment has smoke alarms, fire extinguishers, dead-bolt locks or burglar-alarm systems.

You should also look for a policy that pays the cost of replacing items rather than one that just promises to pay the actual cash value.

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