Renter's Insurance 101

What are the pros and cons of renters insurance?

Renters insurance may be the most cost effective "peace of mind" insurance on the market. Many prospective (and current) renters are unaware of the depth and breadth of coverage that comes with a policy.

Who needs, who might not need it, and why?

I encourage my investor/landlord clients to require tenants to show proof of insurance, including a minimum of $50,000 to $100,000 liability coverage depending on circumstances, prior to occupancy. Renters commonly think of coverage in terms of protecting their personal property, but more importantly, liability insurance reduces your financial exposure for unforeseen accidents both on and off your property. Think being pulled away from your bath by the unexpected call from your mother-in-law and returning 20 minutes later to realize you didn't turn off the water and you turned your neighbor's bathroom a floor below into a swimming pool. Or consider every dog has his day (sometimes not a very good day) and your dog inadvertently nips that young child's finger in the dog run when they're both going after the ball at the same time. Fact of the matter, anyone owning a dog in the city is smart to have a renters insurance policy in place. Check with your insurance agent to make sure your dog (breed) is covered under the policy.

How much can these policies cost, and what do they cover?

Cost-effective policies can cost as little as $10/month in the NYC metropolitan area. It's important to take a detailed inventory of your belongings. We tend to look at our possessions in bulk and may forget about some of the precious and valuable items we've purchased, collected or inherited over the years. We always find time to take pictures for our favorite social media site. Invest 15 minutes into using your mobile phone or tablet and cataloging your property with photographs and video. Should you ever need to recount your inventory after a comprehensive loss (e.g., fire or burglary), you'll have a complete accounting at your fingertips.

For those renters that have insurance in place, it's important to read your policy cover to cover and ensure that the coverage you think you have is actually included in your policy. Also, update your coverage as needed. If you start collecting fine art, watches, historical documents, signatures, expensive sporting equipment, musical instruments, etc., or take possession of your grandmother's engagement ring, know that your policy will not cover unusual and precious items. Ask your insurance agent how to put Scheduled Personal Property (SPP) coverage in force to protect your most valuable items. SPP coverage may even cover valuable items held in a safety deposit box or other secure locations outside your apartment.

More and more people have a virtual relationship with their employer and many have fully functioning offices in their apartments. Check with your insurance agent to ensure adequate coverage. A renters policy may not cover items used for business purposes. Remember, too, that most homeowners, renters and commercial insurance policies do not cover floods. Flood insurance is generally only available through a separate policy. Approximately 90% of disasters in the U.S. are flood related. Although city dwellers may feel they're out of harms way, recognize that 25% of flood losses occur in low to moderate risk areas.

It's important to take a detailed inventory of you belongings.