2torial #0641:
Learn2 Buy Renter's Insurance (continued)

Understand the options

Renter's insurance has two sorts of coverage (property and liability), two levels of coverage (cash value or replacement), and two general categories of policy (basic and comprehensive). These are some of the perils commonly covered:

• Fire, explosion, or lightning (including smoke and fire-related water damage)

• Windstorm or hail (may be excluded or require extra coverage in hurricane areas)

• Theft or vandalism

• Volcanic eruption (but not earthquake damage, which is either excluded or requires a different policy or additional coverage on your basic policy)

• Water-related damage from your plumbing (floods caused by nature require additional coverage if you live in a flood plain)

• Electrical surges

Property and liability coverage. Most policies typically cover both these areas of harm, including damage to or loss of your belongings (or others' property on your premises) by disaster or theft, as well as medical and legal expenses arising if someone gets injured in your home. They usually also help with your living expenses if your home suddenly becomes unlivable.

Your policy may exclude damages in any of the previously listed categories due to negligence (for instance, if you left the bathwater on, causing a flood). Ask the agent about any exclusions before you decide on a policy.

If you own a condo, read the condo association's insurance policy to find out what parts of your unit's interior are covered. For instance, are your floors, finished walls, and improvements insured? Seek a renter's policy that will cover what the other policy doesn't.

Cash value vs. replacement value. Cash value coverage pays the depreciated value of your property, or what you could get if you sold it. Replacement value pays what it would cost to replace an item. Though cash value coverage has slightly cheaper premiums, it's not worth it if you ever have to make a claim. Make sure you get replacement value coverage.

Basic vs. comprehensive policies. Basic or standard policies cover your property against named perils (like those in the previous list). This means if it's not specifically mentioned in the policy, it's not covered. Comprehensive policies, which are more expensive, cover everything that's not explicitly excluded on the policy (typical exclusions include earthquake, flood, and hurricane damage in likely areas).