Renters Insurance: Beware of the Fine Print

For households buying renters insurance for the first time, the whole process can be a little bit complicated. Lots of younger apartment dwellers and other renters don’t even know they can benefit from renter’s insurance, or may be confused about how much or what kind of renter’s insurance to buy. There are also the perennial problems with fine print in renter’s insurance. As with nearly any kind of insurance, renter’s insurance providers often seem to be helping themselves to a wider profit margin by including potentially misleading or confusing items in the fine print of an agreement.

The fact about any type of insurance is that consumers who buy policies need to research them thoroughly in order to get the most benefit out of what they buy. Just signing onto a policy with a quick scan of related insurance documents can often lead to some troublesome situations. Here are some of the issues that renter’s insurance buyers need to look carefully at before signing a policy.

Insured Value

Some people might think that renter’s insurance just automatically provides the right value for your possessions. In fact, it doesn’t work this way. Those looking to purchase renter’s insurance need to compile a complete inventory of the items that they want covered. They also need to provide evidence of value for those items. In addition, different renter’s insurance companies will value items differ ways including a lump payment, or by actual cash value or replacement value. Actual cash value is whether the item is worth in today’s market. Replacement value takes depreciation into consideration. Talk about all of these values with your agent to understand what you would receive in a claim.

Item Coverage

When it comes to buying renter’s insurance, it’s pretty certain that not every item in your home will be covered. some buyers assume that items will automatically be covered, but to be sure, go over your list with the insurer representatives to make sure that you have coverage for the items that you want to protect against loss.

Event Coverage

You’ve heard that renter’s insurance protects your personal possessions against theft, fire and other situations, but what you may not have heard is that insurance companies will typically include “event exclusions” for some common kinds of risks, including flooding, water damage, self-ignited fires, or a wide range of other events. Talk frankly at the outset about when a company would and would not pay on your renter’s insurance claim.

Other Exclusions

Some renter’s insurance companies have been known to add some pretty outlandish exclusions to agreements. For example, the company might cap payment on one class of valuables, such as electronics, a low dollar value like $500. All of these exclusions are based on computer algorithms about what is most likely to cost an insurance company money. When a customer is passive about creating a policy, the insurer is liable to take over and craft the kind of policy that will give them the widest profit margin. Make sure your interests are represented in the policy before you sign.

Considering these key aspects of negotiating renter’s insurance will make you a better buyer and help you protect your interests in this kind of insurance agreement.