Renter's insurance is designed especially for people who live in apartments
and rented houses. It not only pays to replace your personal property
when it's damaged by fire, tornadoes or other devastating losses-it
also pays for items that are burglarized or vandalized. It even pays
for water damage to your belongings if your upstairs neighbor's water
pipes break and leak all over your stuff.
Renter's insurance does not pay for damage caused by floods or
earthquakes. If you want to cover those risks, you need to buy a
separate policy for each. It also doesn't pay for damage caused by
your intentional acts.
Additional Living Expenses
If you are forced to move out of your apartment while repairs are made,
or until you can move to a new apartment, a renter's insurance policy
can also pay for your "additional living expenses." This coverage pays
for the cost of temporary lodging and a portion of your costs for eating
in restaurants when you're no longer able to prepare your own meals.
Replacement Cost versus Actual Cash Value
For a little extra premium, you can upgrade your coverage to pay for
the actual cost to replace a damaged item with a brand new item. For
example, if your policy pays for "actual cash value," the payment for
your damaged sofa will be based on the cost of your sofa minus depreciation
for age, wear and tear, and any prior damage. While you paid $1,000
for that sofa five years ago, it was worth only $400 just prior to
your loss. But, if your policy covers "replacement cost," you will
receive payment to purchase a brand new sofa of similar size and quality
as the original sofa.
If you have expensive jewelry, collectibles, art, silver, or antiques,
you must "schedule" these items with the insurance company in order
for them to be fully covered. Your company can also tell you what appraisals,
if any, are needed to schedule items. Check with your insurer or agent
about the kind of items that need to be scheduled, and what limits
your policy has on specific types of items.
Renter's insurance also provides coverage to you if someone gets accidentally
injured in your apartment or if you accidentally start a fire in your
apartment. If the injured person sues you and wins, you are covered
up to the liability limits of the policy, plus any legal expenses.
Attached are checklists that will help give you an idea of what to
consider when taking inventory of the articles you own. Be sure to
add any of your own articles that you consider to be valuable. Keep
these in a safe place with your policy.
State of Nebraska
Department of Insurance
941 "O" Street, Suite 400
Lincoln, Nebraska 68508