When you purchase a renter’s insurance policy, you do so hoping that all of your belongings are covered against theft and damage.
Renters’ Insurance is one of the least expensive policies to buy, so purchasing a policy can seem like a great deal. But don’t let any renter’s insurance policy lull you into a false sense of security — you need to do your homework. Your renters’ insurance may not cover everything you would expect it to — a lesson these four renters learned the hard way:
1. Natural disasters:
“When I purchased my renters’ insurance a few years ago, I was surprised that I had to buy earthquake insurance separately as a California resident,” says Jackie Lam, a frugal-living guru running the blog Cheapsters.org out of Los Angeles, California.
She’s not alone. When you live in an area known for extreme natural disasters — hurricanes, tornadoes, earthquakes and so on — you may not be covered against the elements. So don’t allow a natural catastrophe to also destroy your finances, and find out ahead of time which disasters are covered.
2. Water damage vs. flooding:
Understanding the difference between water damage from outside your home and from inside your home is important. If a pipe bursts and you have renters’ insurance, there is a good chance that you will receive enough money to replace your items. However, that may not be the case if groundwater rises and enters your apartment, or if there is a flood that infiltrates your home.
“Nobody ever thinks they need it until it’s too late,” says Doug Nordman, a military financial expert from Pearl Harbor, Hawaii. He has seen people disappointed when floodwaters disqualify renters from receiving payouts for damaged or lost personal items.
It’s also worth noting that hurricane-protected renters might get help if the structure of their home is damaged first by the storm and water enters as a result – but water damage from flooding alone may not be covered.
3. Exclusions for valuable personal property
For many, purchasing renters’ insurance is about protecting expensive items like computers, other electronics, musical instruments and jewelry. However, Bobby Lee, the money master behind the video blog 2-Minute Finance and a Danville, California resident, discovered that some renters’ insurance policies specifically exclude these items.
“I was surprised at some of the exclusions* for computers, tablets, cameras, jewelry and valuable personal property,” he says. “It’s important to ask for additional endorsements for items you believe are especially valuable.”
Nordman says active military personnel need to be particularly attentive. He says that many service members living on-base assume they’re automatically insured when they aren’t. “They only realize they need personal property insurance after it’s too late,” he says.
4. Lack of documentation
You might claim that you lost something due to a break-in or natural disaster, but the insurance company may not pay your claim if you can’t prove the item’s existence and value.
“I was surprised to find that I need to basically itemize everything and take photos of valuables,” says Jackie Lam. Store your list safely by using the online cloud so you can access it from anywhere, or save it to a flash drive kept in a fireproof and waterproof safe.
Overall, it’s important to take the time to fully understand your renters’ insurance coverage. Read through your policy, and ask your provider plenty of questions, so you won’t be caught unaware at a time when you really need your insurance to come through for you.
*Computers, tablets, cameras, jewelry and other valuable personal property may be covered by your policy, but sublimits may apply.