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Personal Insurance

Renter’s Shouldn’t Overlook Need to Insure Personal Property

By February 4, 2014 July 29th, 2019 No Comments

Most renters possess at least $25,000 in property belongings and property. Yet fewer than half of those tenants have a renter’s insurance policy, according to the Insurance Institute of Michigan.

Too many renters completely underestimate the value of the personal possessions they’ve accumulated over the years, or wrongly assume their landlord’s insurance policy covers the renter’s possessions. However, a standard renters policy provides coverage for big-ticket personal items-such as furniture, computers and television sets-in the event they are damaged or destroyed. And, like homeowners insurancerenters insurance covers your financial responsibility to other people injured at your home or elsewhere by you, a family member or your pet and pays legal defense costs if you are taken to court.

Renters and homeowners insurance is a good buy in Michigan. The average cost of a renter’s insurance policy in Michigan is $170 annually. That compares to national average of $182. The average cost of homeowners insurance policy in this state is $721, below national average of $822. (source: National Association of Insurance Commissioners).

There are two types of renter’s insurance policies. One is an actual cash value policy, which pays policyholders to replace their possessions minus a deduction for depreciation. The other is a replacement cost policy. This type of policy usually costs at least 10 percent more because it pays policyholders the actual cost of replacing their possessions, up to the policy limit.

By purchasing renters insurance, a tenant’s possessions are covered against losses from fire, smoke, lightning, vandalism, theft, explosions or windstorms. Like standard homeowners insurance, renters policies also typically cover policyholders for additional living expenses if they are unable to reside in their rental property because of a fire or other covered peril.

Losses incurred by either floods or earthquakes are excluded under standardrenters insurance but can be purchased separately. Moreover, renters policies can be supplemented with the purchase of a rider, which offers broader coverage for expensive items such as jewelry, silver and furs.

To save money on a renters insurance policy you can:

  • Increase the policy deductible from $250 to $500. The deductible is the amount policyholders must pay out-of-pocket before their insurance coverage takes effect. Increasing the deductible can result in premium savings of up to 15 percent.
  • Install smoke detectors, dead-bolt door locks and a fire extinguisher to qualify for premium discounts.
  • Stop smoking. Some insurers offer reduced premiums to non-smokers because smoking is one of the leading causes of residential fires.