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Many of us tend to think that only homeowners need insurance protection and so we often equate residential insurance with homeowner's insurance. But more "residences" are occupied by renters than by owners. And while the physical structures in which renters live will be insured by the owners of those structures, the valuable possessions of renters will not be. Renters must purchase their own renters insurance policy if they want to be reimbursed for the loss of their possessions as a result of theft, fire or other disasters. Similarly, renter's insurance is essential if a renter wants protection from claims or lawsuits resulting from bodily injury or property damage to others caused by an accident while on the renter's property, or if a renter wants coverage for expenses that he or she will incur if their apartment becomes uninhabitable due to, for example, a fire.

I recently re-read the California Department of Insurance (CDOI) February 2015 news release on renters insurance. It contained a few familiar points that are nevertheless worth repeating:

Your landlord's insurance covers your building, but not your personal property. As a renter, you need your own insurance policy to protect you from loss of your "stuff" in case of theft, fire or other disaster. 

Statistics show that renters are much less likely to have insurance than homeowners. An Insurance Information Institute poll conducted in 2014 found that 95 percent of homeowners had insurance, but only 38 percent of renters had insurance protection for their possessions. And yet when disaster strikes Californians - as in the wild fires that swept through Weed or the earthquake that jolted Napa last year -- renters' possessions are just as vulnerable as those of homeowners. In fact, renters are about as numerous as homeowners in both Weed and Napa.

Renter's insurance may not be as expensive as you might think. The CDOI news release states that premiums average between $15 and $30 per month.

While the primary purpose of renter's insurance is to replace or repair damaged or stolen possessions, the personal liability portion of a renter's policy will protect you from some legal expenses and damages that you might incur if your negligence causes personal injury or property loss to a third party that occurs on your premises.

Your renter's policy may also include reimbursement for the reasonable costs and expenses you might incur if your rental unit is rendered uninhabitable, including costs of food and temporary shelter. This additional coverage may require higher monthly premiums. You will have to decide whether the added benefit is worth the additional cost.

You will also need to decide whether you want your renter's policy to cover the current value of your possessions or their replacement value. If you own a three year old TV that is stolen, and your policy covers its replacement value, you will be reimbursed for the cost of a new TV of similar make and model. If, on the other hand, your policy covers you for the current value of your possessions, you will be reimbursed for the initial cost of your TV less its depreciation over the last three years. Obviously, the premiums for a replacement value policy will be more costly.

One last tip. Whether you are a homeowner or a renter, you should maintain a complete and up-to-date inventory of your valuable possessions. The inventory should include photos, dates of purchase, purchase prices, serial numbers and other relevant descriptions. There are phone and PC apps available to help you with this task.

As I mentioned above, many fewer renters maintain property insurance as compared to homeowners (38% to 95%). In some cases this is an informed and rational judgment based upon the cost of insurance premiums measured against the value of personal possessions. But in many cases uninsured renters are putting themselves at undue risk. If you rent your home or apartment and want more information on the possible advantages of rental insurance for you, please call or email me. 

Alex Pfeifer
Pfeifer Insurance Brokers
650 762-8070
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