What standard policies cover:

There are several types of residential insurance policies. The HO-4 policy is designed for renters, while the HO-6 policy is for condo owners. Both HO-4 and HO-6 cover losses to your personal property from 16 types of perils:

1. Fire or lightning
2. Windstorm or hail
3. Explosion
4. Riot or civil commotion
5. Damage caused by aircraft
6. Damage caused by vehicles
7. Smoke
8. Vandalism or malicious mischief
9. Theft
10. Volcanic eruption
11. Falling objects
12. Weight of ice, snow, or sleet
13. Accidental discharge or overflow of water or steam from within a plumbing, heating, air conditioning, or automatic fire-protective sprinkler system, or from a household appliance
14. Sudden and accidental tearing apart, cracking, burning, or bulging of a steam or hot water heating system, an air conditioning or automatic fire-protective system
15. Freezing of a plumbing, heating, air conditioning or automatic, fire-protective sprinkler system, or of a household appliance
16. Sudden and accidental damage from artificially generated electrical current (does not include loss to a tube, transistor or similar electronic component)

Floods and earthquakes aren’t on the list. If you live in an area prone to either, you’ll need to buy a separate policy or a rider. In some coastal regions, where hurricanes might pose a threat, you might also need to buy a separate rider to cover wind damage.

4 Basic Lessons:

1.      A Landlord’s Policy Doesn’t Cover The Tenant’s Possessions

Many renters assume that their landlord’s insurance policy covers their personal property inside the apartment, and they don’t need insurance like homeowners do.

2.      It’s not as Expensive as They Think

Most renter’s insurance policies cost significantly less than you think: the National Assn. of Insurance Commissioners (NAIC) estimates that a policy costs $185 per year on average. And given that the typical burglary causes about $2,100 in losses, renter’s insurance is actually quite a good deal.

3.      “I Don’t Own Enough Stuff” is No Reason to Go Bare

Many first-time renters underestimate the value of the property in their apartment, but their possessions are usually more valuable than they think.  Household items like couches and mattresses cost several hundreds of dollars each to replace.

In addition, many renter’s insurance policies either include or have the option to include identity theft coverage. Since most people own either a laptop, smart phone or both, the renter’s policy can cover not only the loss of the device but also any misuse of the financial data that’s stored on it. Financial fraud from identity theft can do serious damage to a person’s finances.

4.      It Covers More Than Your Property

Beyond covering personal property, most renter’s insurance policies also cover liability and additional living expenses (ALE).   If someone gets hurt while visiting your apartment, your renter’s insurance policy can help cover any liability costs. Additionally, if your apartment should be destroyed or become temporarily uninhabitable, most renter’s insurance policies will cover the costs of hotel rooms and other living expenses.  It is important to have the liability coverage to ensure that your wages never get garnished in a world where everyone is looking to sue!