Deductible May Apply
Alice Yao | Updated August 24th, 2020
If you are renting an apartment unit or a home, your apartment manager or landlord will always ask for a proof of renters insurance policy.
The specific coverage on the policy that the landlord wants to see is the liability coverage. By mandating their tenants to carry liability coverage, landlords are able to minimize risks in cases of accidents on their property.
As a renter, that same liability coverage in your renters insurance also protects you in case you were found liable for any damages to the property or injuries to others.
In this article, we will go over these topics in your renters insurance:
- Liability coverage
- Personal property coverage
- Additional living expense coverage
- Deductible (out-of-pocket expense)
If you or your household family members accidentally caused bodily injury or property damage to another person, the personal liability insurance on your policy will cover the following:
- Medical bills
- Lost wages
- Death benefits
- Pain and suffering
- Lawsuits relating to the accident
- Property damage as a result of the accident
Coverages for your pets
According to the Insurance Information Institute, there were nearly 18,000 dog bite claims in 2019 and the average payout for a dog bite claim was $44,760. Dog bite claims remain as one of the top personal liability insurance claims year after year in the United States.
The financial protection afforded by your personal liability coverage also extends to injuries or damages caused by your pets including dog bites.
What are not covered in personal liability coverage
Keep in mind that in order for your liability coverage to be activated, you must first be found liable for the cause of injuries or damages to a third party.
When you carry liability insurance, not only does your insurance company have to launch an investigation to prove your negligence, but they also have the duty to defend you as its customer once negligence has been established.
Nevertheless, there are certain exclusions under your personal liability insurance coverage we want to go over:
- Liability involving automobile accidents. If you are found liable in an automobile related accident, your auto liability insurance coverage will apply and take care of the injuries and damages to the other party.
- Intentionally causing bodily harm or property damage to another individual by you or family members.
- Injuries or damages sustained by you or family members who live in the home. Liability insurance only applies to a third party, so it would not cover any injuries or damages to you or your household family members as result of your own negligence.
- Business activities relating to your profession. Liability insurance will not cover business-related liability claims against you.
Personal property coverage
First, the personal property coverage is included for you to cover all of your belongings, such as:
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Protection outside of your home
Depending on the type of renters policy you purchase, this coverage could also protect your belongings outside of your home. For instance, extra furniture stored at a storage unit or your laptop left in your car during dinner.
Coverage limit on valuable items
It is important to note that most renters insurance policies place a coverage limit on valuable items, such as jewelry, fine arts, golf clubs, collectibles, etc. If there are expensive items in your possession, you should speak to your insurance agent about adding a scheduled personal property coverage.
Additional living expense coverage
Another essential coverage on your renters policy is called additional living expense, also commonly known as loss of use. Just as its name says, this coverage will take care of additional living expense in the event that your unit is not livable due to a covered peril such as fire.
Provides reimbursement for additional cost
If your unit is not livable due to fire, additional living expense coverage will take care of extra costs that may come with living in a hotel or another apartment unit.
This coverage also helps with any extra costs for meals at restaurants or getting takeouts due to limited access to a functioning kitchen.
If you have pets, this coverage will also reimburse you for increased expenses due to boarding costs of your pets.
There is a limit to this coverage and it is specified on your policy either with a capped dollar amount limit (e.g. $10,000) or a specified time period (e.g. 12 months).
Deductible (out-of-pocket expense)
Most renters policies have a minimum policy deductible requirement that starts at $250 or $500. Your insurance company may offer the deductible as high as $2,000. Lower the deductible you choose, the higher the premium will be, and vice-versa.
Keep in mind that deductible is your out-of-pocket expense after a claim is filed and before the insurance company makes any claim payout to you. For example, if your payout is $3,000 and the deductible is $500, you will receive $2,500 as the final payout amount.
Renters policy is relatively inexpensive and provides the peace of mind knowing that your valuable things are covered. It is also nice to know that you have coverage in case of expensive lawsuits due to liability.
Every insurance company has its own guidelines. We always recommend talking to your insurance agent to discuss specific insurance topics in further detail. Working with an insurance agent is the best way to make sure you are properly covered.
By Alice Yao |