Renters’ Insurance -- Why It Is a Good Idea
Many tenants mistakenly believe that their belongings will be covered under an insurance policy held by their landlord. The insurance policies held by landlords typically cover only damage to the structure of the building, or when someone suffers an injury or damage due to a condition on the property for which the landlord bears responsibility.
For example, the landlord may have a duty to remove snow and ice from an apartment building’s steps and surrounding sidewalk area. If a tenant slips and falls on the ice and injures himself due to the landlord’s failure to properly treat the sidewalk, the tenant may recover under the landlord’s insurance policy. If, however, a landlord rents an entire single family home to a tenant, the lease agreement may contain specific language designating the tenant’s responsibility for upkeep of the steps and sidewalk. If the duty of care is designated to the tenant, the landlord’s insurance policy may not cover an injury for a tenant or guest who slips and falls on the property. Unfortunately, many tenants do not realize this until it is too late.
What could possibly go wrong?
There are a host of things which could happen while a tenant leases a dwelling causing great personal expense to 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. 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 claims of negligence. The landlord may also have a substantial deductible on the policy. In circumstances where a tenant’s negligence causes damage to the landlord’s property, the tenant may be required to cover the deductible. The landlord's insurer may successfully sue the tenant for the full extent of the damage if the tenant is found to be negligent.
Most commercial insurance companies offer renters' insurance policies that cover personal belongings such as furniture, clothing, and home goods in the event of loss by fire, vandalism, theft, water damage, etc. These policies may also cover 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. These policies also provide personal liability coverage for medical payments to others, costs of defending suits, etc.
Will the policy cover everything?
Renter’s insurance policies may have limits to the amount of coverage provided for loss or damage to electronics, jewelry, art, antiques, or collectibles. If you own expensive televisions, computers, or other home electronics, you may need to get broader coverage for your items in a supplemental policy. At a minimum, a tenant should carefully list and describe all personal property, and the estimated cost of those items (either the purchase price, or the replacement price based on the current market value). 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, or in a fire-proof safe within the dwelling.
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, and unusual wear and tear to the unit caused by the tenant. Liability for damage to other residences, such as water damage, and to other tenants' property will be covered by most policies.
Renters’ insurance policies may also cover your belongings even when they are located outside of 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.
Additional information on renter’s insurance may be found on the Maryland Insurance Administration’s website: http://insurance.maryland.gov/Consumer/pages/HomeownersAndRentersInsurance.aspx.
How much will this cost me?
When shopping for renter’s insurance, a tenant should get price quotes from several different companies, and compare different policies and coverage limits to determine what would work best. The Maryland Insurance Administration estimates that the average renters’ insurance policy costs between $15-$30 per month. Before you begin comparing policies and price quotes, you should make an inventory of your belongings and figure out the estimated value of your items. You also need to consider how much liability coverage you want to cover injuries or damage to other people or their property in the event that they are injured in your dwelling.
It is also important to consider how much the deductible will be on your renters’ insurance policy. A deductible is the amount you agree to pay out of pocket in the event of damage to your personal property before the insurance company makes any payments. For example, if the renter’s insurance policy contains a deductible of $200 and your laptop, valued at $1200, is stolen from your apartment, the insurance company will pay you $1,000 for this claim of loss. Ordinarily policies with a high deductible cost less per month than those with a lower deductible.
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 the tenant has more than one policy with same company. Some companies offer discounts to senior citizens, members of groups or associations, and to non-smokers.
What information do I need to purchase renters’ insurance?
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 fire 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. You want to be sure that you are comparing policies that offer the same types of coverage, same deductibles, and same coverage limits. Select an insurer you feel you can trust and are comfortable dealing with. The Maryland Insurance Administration offers a handy worksheet for comparing insurance policies: http://insurance.maryland.gov/Consumer/Documents/publications/hoshoppingworksheet.pdf. Note that this worksheet is titled Homeowner's Insurance. When shopping for your insurance policy, be sure to specify that you are looking for Renter's Insurance.
How do I know the insurance company is legitimate?
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 Joint Insurance Association
The Joint Insurance Association (JIA) established to carry out the provisions of a state law, the Maryland Property Insurance Availability Act. The Association provides essential property insurance coverage for Maryland property owners and tenants who cannot get insurance coverage for their property. The program is administered by a governing committee. The JIA is regulated by the Maryland Insurance Administration. The Joint Insurance Association operates statewide. The Joint Insurance Association is not a State agency.
Read the law: MD Code Insurance §25-401 and following
Procedure to obtain coverage under the Joint Insurance Association
To apply for coverage through the Maryland Joint Insurance Association, you may visit the Association’s website at http://www.mdjia.org and download a form. Or, you may request a form via email at email@example.com, or by phone at (410) 539-6808. Once completed, the signed application form and any other related documents should be mailed to: Joint Insurance Association, 3290 N. Ridge Road, Suite 210, Ellicott City, MD 21043. Please be sure to keep a copy of the completed application forms for your own records. The property may be inspected to determine whether it is insurable. You may request a copy of the inspection report. Losses resulting from flood or surface water are not covered by any policies offered by the JIA.
NOTE: A deteriorating neighborhood or environmental hazards beyond the control of the property owner or tenant are not grounds for rejection.