Landlord's insurance on the dwelling usually covers damage to the building, and protects landlord against claims when tenant or other person suffers injury or damage because of a condition for which landlord is responsible. Landlord's insurance almost never covers the tenant's possessions - furniture, clothing, etc. - in the dwelling.
Most tenants do not realize their need for renters' insurance until it is too late. There are many possible occurrences that can be expensive for an uninsured tenant. For example, the upstairs tenant could cause a water overflow, which seriously damages furniture and clothing. While the negligent tenant may be sued, it is easier for an insurance company to handle the situation. Perhaps a rainstorm causes the county storm sewer system to back up, flooding basement apartments. Not only is there damage to the tenants' property, but they have to go to a motel while their apartments are being repaired. What if a plastic container fell on a lighted stove, causing $800 in damages for smoke related issues? Apartments can be burglarized. Guests can get injured. Occurrences such as these can be expensive for an uninsured tenant.
Most commercial insurance companies offer renters' policies that protect furniture, household contents and personal belongings against fire, vandalism, theft, water damage, etc., as well as the costs of living elsewhere while repairs are being made. Renter’s insurance policies can cover everything from electronics to clothing to household appliances. Even a minimal number of items could add up to thousands of dollars’ worth of merchandise, which can all be covered in a basic policy. Coverage for storm sewer back-ups is optional coverage and requires an additional fee. These policies also provide personal liability coverage for medical payments to others, costs of defending suits, etc.
A tenant should carefully list and describe all personal property and the cost of those items. Receipts should be kept as proof of those costs. Photographs or videotapes of property would also be valuable documentation. Such documentation should be stored outside the rental property in a safe place.
A tenant needs to be aware that standard renters' policies cover structural damage to the tenant’s residence caused by fire, smoke, and explosion, but do not cover damage done to the residence that is normally covered by a security deposit, such as stains on wall-to-wall carpeting, damage to appliances, etc. Liability for damage to other residences, such as water damage, and to other tenants' property will be covered by most policies.
Many policies do not limit protection to your belongings located in your home or apartment. For example, items you have insured often are covered if they are stolen by someone who breaks into your car or if they are damaged while not on your property.
Landlord's Insurance -- It Is Different from Renters' Insurance
Many tenants believe that their landlord's insurance will cover their losses, but this is hardly ever so. If you rent, your personal belongings will not be protected against loss or damage unless you have a renter’s insurance policy. The landlord’s insurance also will not protect you from being liable for damage you might cause to the building inadvertently or to others who are injured at your property.
Your landlord has insurance for structural damage to the building, and might even be protected against damage caused by tenants. Landlord’s insurance covers damage to the landlord’s property and protects him against the claims of negligence. The landlord may also have a substantial deductible, so that a tenant who negligently damages the landlord's property may be required to cover the deductible. The landlord's insurance company can also sue the tenant for the full extent of the damage if the tenant is proven negligent.
How Much Insurance Coverage Does a Tenant Need?
Tenants should compare several policies and choose one suitable to their needs and pocketbooks. A reasonable basic policy may be obtained for $180-$300 per year. You should start by making an inventory of your personal property and determine the value of that property. You also need to consider how much liability coverage you want to cover injuries or damage to other people or their property.
A tenant wishing to insure against loss caused by hazards to property such as fire, burglary, etc., can do so. Most commercial insurance companies offer the following coverage to tenants:
- reimbursement for loss of or damage to personal property on the premises where the damage is caused by fire, burglary, theft, vandalism, lightning, sewage back-up, basement leaks, waterbed leaks, negligence of another tenant, etc. The policy may also cover loss of or damage to tenant's personal property off the premises.
- reimbursement for tenant's extra living expenses if caused by a hazard insured against;
- protection for tenant against a claim by another person where the claim arises from an accident or because of tenant's negligence occurring on or away from the premises. For example, tenant bakes a cake, leaves in some nutshells and a guest breaks a tooth on a shell; or tenant is responsible for a fire that damages the building where he lives, and landlord sues. (Accidents arising out of business pursuits, certain water craft, and most motor vehicles are generally not covered.)
Ask About Deductibles
A deductible is the amount you agree to be responsible for in the event of damage to your personal property before the insurance company makes any payments. The standard policy usually contains a deductible clause, for example, $100, so that the company will be liable only when the loss exceeds $100 and then only for the amount in excess of $100. If you select a high deductible, you pay more out-of-pocket for any damage; however, your premium should be lower.
Ask For Discounts
To help keep your premium down, ask what discounts the company offers. A tenant may be eligible for special credits on the policy if the dwelling unit has smoke alarms, burglary alarms, fire extinguishers, sprinkler systems, deadbolt locks on exterior doors and/or if tenant has more than one policy with same company. Some companies offer discounts to senior citizens, members of groups or associations and nonsmokers.
Each policy contains a precise description of the extent of coverage. Tenant should read it carefully to be sure that the particular hazards he is concerned about will be covered to the extent he wishes.
Ask For Price Quotes and Comparison Shop
When you call an insurer, you will probably be asked about the type of construction and design of your residence, the distance to the nearest fire department and hydrant and the use of security devices. Make sure the information you provide is accurate. Also, make certain you provide the same information to each company and that you compare policies that offer the same types of coverage with the same deductibles and coverage limits. Remember: consider the coverage, the limits and the service. You may want to ask friends and neighbors about their experiences with their insurance company. Select an insurer you feel you can trust and are comfortable dealing with.
Protect Yourself From Insurance Fraud
It is illegal for unauthorized companies and agents to sell insurance in Maryland. Once you have selected an insurance company, contact the Maryland Insurance Administration (MIA) to verify that the agent and/or company is authorized to sell insurance in Maryland. You can get this information on the MIA website at www.mdinsurance.state.md.us or by calling the MIA at 800-492-6116.
The Federal Crime Insurance Program and the Joint Insurance Association of Maryland
In areas with high rates of crime and vandalism, commercial insurance companies may be unwilling to provide insurance. In such cases, burglary and robbery insurance may be obtained through the Federal Crime Insurance Program. Also, basic coverage (fire and vandalism) may be obtained by tenants and landlords through the Joint Insurance Association of Maryland.
Established in 1971, the Federal Crime Insurance Program is administered by the Federal Insurance Administration, which is part of the Federal Emergency Management Agency. Coverage under this program is available in areas where it is difficult to obtain commercial and residential crime insurance. Residents of Maryland are eligible for this insurance. Before residential property will be insured under this Program, certain doors and windows must be equipped with special locking devices.
Amount of coverage under the Federal Crime Insurance Program
Residential policies are available in amounts up to $10,000. For each separate occurrence, claims are subject to a deduction of $100 or 5% of the gross amount of the loss, whichever is greater. Personal property is covered after application of the deduction. Loss of money is covered up to $200. There are special limits for single items of jewelry, furs, antiques, and securities.
Losses covered under the Federal Crime Insurance Program
Burglary is the taking of property from the home of the insured by means of a felonious entry. The premises must have been entered forcibly, and there must be physical marks of forced entry at the place of entry.
Robbery is the taking of property by violence inflicted on the insured, by putting the insured in fear of violence, by other theft committed in the insured's presence, or from the body or custody of an insured who has been killed or made unconscious.
Damage to the premises that results from an actual or attempted burglary or robbery is covered under this Program.
Coverage under this program is available both to tenants and to owners of dwellings.
For additional information, write or call (toll free)
Federal Crime Insurance
P.O. Box 6301
Rockville, MD 20849-6301
Toll-free telephone numbers
1 (800) 621-FEMA (3362)
1 (800) 462-7585 (TDD - hearing impaired)
The Joint Insurance Association
The Joint Insurance Association was established in 1968 to carry out the provisions of a state law, the Maryland Property Insurance Availability Act. The Association provides essential property insurance coverage for property owners and tenants who are unable to obtain adequate insurance for their property. The program is administered by a governing committee under the supervision of the Insurance Commissioner of Maryland. The Joint Insurance Association operates statewide.
Read the law: MD Code Insurance §25-410 and following
Procedure to obtain coverage under the Joint Insurance Association
Application for insurance may be obtained from the Joint Insurance Association, 210 N. Charles Street, Suite 1001, Baltimore 21201-4012. Applicant must be at least 18 years old. Telephone: (410) 539-6808. From outside the Baltimore area: 1-800-492-5670.
The property will be inspected, and the applicant or another adult must be present during the inspection.
If the property is found to be ineligible for insurance, the applicant will be told the reason for rejection and the corrections needed for approval.
Reasons for rejection
- Physical condition of the property, such as faulty or deteriorated wiring, heating system, or construction, or evidence of general deterioration or unrepaired damage from previous fires;
- Unsatisfactory use or housekeeping, such as overcrowding, vacancy, or storage of rubbish or flammable materials;
- Violation of law or public policy by the owner or occupant.
NOTE: A deteriorating neighborhood or environmental hazards beyond the control of the property owner or tenant are not grounds for rejection.