by C L Smith

Created on: July 13, 2009   Last Updated: January 18, 2012

Renting an apartment or house poses no fewer risks than owning a residence. The loss of your possessions due to a fire or other insurable event is a tragedy. However, losing possessions that have not been protected by a renters insurance policy is a disaster that could be prevented.

Insurance is a complex issue. Nonetheless, it is critical for the insured to be well informed regarding the particular components of the renters insurance policy prior to contracting for the coverage. This document will help explain the basic elements of such a policy.

Policies

Each type of policy has a different level of coverage. Two standard forms are the Broad Form (HO-BT) and the Comprehensive Form (HO-CT).

HO-BT Policy. This policy insures property against the losses that are identified in the policy. Losses that are not specified in the policy are not covered.

HO-CT Policy. This policy is termed an 'all-risk' policy in that property is insured against all types of loss unless the type of loss is specifically excluded in the policy.

Each renters policy will state a total dollar limit which is the maximum amount that will be paid to the insured regardless of the actual amount of the claim. In most instances, the policy will include a deductible amount equal to a percentage of the total amount of coverage. This deductible is the amount the insured must pay before the insurance company will pay the claim.

Coverages

Personal Property

This coverage pays for the repair or replacement of the contents of your home as well as other personal belongings that are owned by the insured or family members living in the home of the insured. Coverage is limited to an amount specified by the insured and the insurance company. The coverage is limited related to particular types of property that are especially susceptible to loss such as money, securities, and jewelry. These items can be addressed in a separate schedule and by an additional amount of insurance.

Loss of Use

This coverage provides additional living expenses if the home becomes uninhabitable due to a peril addressed in the policy. These expenses include housing, meals, and warehouse storage. The amount paid is the amount above and beyond the normal living expenses. In most instances, Coverage D is limited to 20% of Coverage C. Exclusions, conditions, and specific language are found in the policy.

Personal Liability

This coverage insures against a claim for bodily injury or property damage that arises due to an injury

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