When Korie and Sergii Bukovelo went to see their insurance agent, the newlyweds just wanted auto insurance.
But the couple, who had just moved into their first apartment in Hamburg, ended up with something extra: renters insurance.
Lori Kozuch, their agent from Niagara National, knew their situation and recommended the policy, which neither Korie nor her husband had heard of before.
It provides coverage for all of their belongings—including everything they received as wedding presents. And they get liability coverage if anyone is hurt while in their apartment. All for less than $100 a year. “It’s really cheap. After she told me what it covers for that price, I’m crazy not to [do it],” said Korie Bukovelo, 23,a North Collins native. She bought a policy with New York Central Mutual Insurance Co. for $80 a year. “I can’t really afford to lose my stuff. The cost is well worth it. It’s peace of mind. So I’ll take it.”
Renters insurance is the lesser-known cousin of homeowners insurance, one of the most common insurance policies for consumers.
It’s highly recommended not only by insurance companies and agents, of course, but also by consumer advocates and other experts because it provides significant protection for a low cost. And it’s available from the same companies that insure homes—but at one-fourth the cost.
“It’s very affordable, especially compared to some homeowners’ policies,” said Jay MacDonald, contributing editor at Bankrate.com, a financial services research firm in Florida. “And renters insurance, like homeowners insurance, is the insurance we buy and hope we never have to use.”
The average price for renters insurance is less than $200 a year, according to the National Association of Insurance Commissioners, and it’s been declining for the past few years after peaking at $195 in 2004.
At the Cassetta Agency in Kenmore, for example, a policy with $20,000 in coverage for contents, $100,000 for liability and a$500 deductible averages about $60 per year.
“I know that people rent houses and have families, and that’s a really low amount. I can only imagine the things they’re not insuring,” Bukovelo said.
Like home insurance, renters insurance covers damage to belongings inside your house or apartment for losses from fire, smoke, lightning, vandalism, theft, explosion, windstorm and water damage from plumbing problems. Floods and earthquakes are not covered.
It doesn’t cover damage to the house or building itself, which would be covered under the landlord’s policy. But it would cover extra living expenses— hotel bills, temporary rentals or restaurant meals—while the dwelling is repaired, and would also cover belongings stolen from a locked car.
Liability coverage
Renters insurance also provides liability protection, no-fault medical coverage for others, and legal defense coverage, which experts say can be even more important.
“It’s not so much your things, but if somebody trips and falls in your house or apartment and sues you, then you’re up a creek,” said Loretta Worters, spokeswoman for the Insurance Information Institute. “You could lose everything.”
However, many consumers aren’t aware that such insurance is available, don’t know they should have it, or just think they don’t need it.
So while 96 percent of homeowners have insurance, only 43 percent of renters have coverage, according to a 2006 poll by the Insurance Research Council, an arm of the American Institute for Chartered Property Casualty Underwriters.
“We get a fair amount of requests for it, but nowhere near enough,” said Paul Dreher, director of personal lines at Buffalo-based agency Lawley Insurance. “We know there are many apartment renters out there that do not purchase the coverage. They’re just naive about it, not aware that it’s important and don’t think about it.”
One of the most common misperceptions among renters is that their landlord is responsible for their belongings, so they don’t need to buy extra coverage. In fact, the opposite is true: The owner of the property is only responsible for the building, not the contents.
“I qualify renters insurance as the insurance that people wish they’d had,” MacDonald said. “You often don’t think to insure your living space when you’re a renter.”
Others mistakenly think their landlord buys coverage for them, or they don’t need it. But the value of laptop computers, flat-screen televisions and other electronics, as well as clothing, jewelry and some furniture, can easily run into thousands or tens of thousands of dollars, even for people who think they don’t own much.
“If a renter were to lose all or even some of their belongings, this minimal investment could mean tens of thousands of dollars to cover the replacement of the contents of the individual’s apartment or home,” said Jaclyn Darrohn, spokeswoman for insurer Allstate Corp.
And then there’s the liability protection. “The liability portion of the policy is where you really want to make sure you have enough,” Worters said.
“If you have company over and somebody gets injured and they sue you, this would protect you, just like a homeowners policy would,” Dreher said.
Renters insurance has long been important for younger consumers, including college students living in apartments as well as young professionals and couples who are starting out.
But the national mortgage and foreclosure crises have thrown or threaten to toss millions of people out of their homes and back into renting. And while they no longer own a home, they still must make sure they have proper coverage for the rest of their property, which now becomes more important.
“When you have fewer worldly possessions, to me it makes more sense to insure them,” MacDonald said.
According to the U. S. Census Bureau, 37.1 million housing units were occupied by renters nationwide in the second quarter of 2010, up 8.2 percent from 2006.
Consider this
Here’s what to consider when buying renters insurance:
1. Actual cash value vs. replacement cost. Actual cash value coverage pays only what an item is actually worth on the market at the time of the claim, after depreciation—not what it would cost to replace it new. Replacement cost coverage is about 10 percent more expensive, but Worters said it’s “well worth the extra expense.”
“If you have a 5-year-old or 10-year-old sofa, you’re only going to get the value of that sofa for that day,” she said. “A good sofa today could run you $3,000 easily, [but] a 10-year-old sofa is only worth $300 or $400.”
2. The amount of coverage for your belongings. Add up the cost of what you would need to replace, being realistic about the value of your possessions. Dreher said $25,000 is usually an adequate amount.
There are often limits on coverage for certain things, so consider a special “rider” or “floater” just for more specialized or expensive items, such as electronics, laptops, silver, collections, artwork, musical equipment or jewelry.
Also, as with home insurance, take an inventory and even pictures or video of your possessions, to prove ownership.
3. The amount of liability coverage. You can get as little as $100,000, but experts recommend at least $300,000. The more possessions and value you have, the more you should get.
4. Combining with other coverage. You can buy additional umbrella liability for much higher coverage, or a business policy if you run a home business.
5. Deductible. To save money on the premium, opt for a higher deductible. Or go lower if you want to ensure certain items are protected that would otherwise fall within the deductible.
6. Discounts. Since renters insurance is usually available from the same companies that offer home and auto insurance, you can often get discounts for having multiple policies with the same company. Also, as with homeowners policies, discounts are available for having smoke alarms, security systems and deadbolt locks, as well as for good credit or being over 55.
Courtesy: buffalonews.com