The first and biggest mistake people make when it comes to renter’s insurance is not purchasing it. Several studies conducted on the matter show that more than half of the current renter population don’t hold such a policy. The second mistake renters make in regard to renter’s insurance is one that leads to denied claims. How so?
Renter’s insurance is your safety net in case of property damage or personal liability. The policy covers a series of incidents dubbed perils, but it has its limits—it doesn’t cover damage done by everything and anything. These exclusions include flooding, earthquakes and hurricanes.
Just as you need homeowner’s insurance to get your mortgage approved, or car insurance to take your new ride on the roads, renter’s insurance can be a final requirement you need to sign that lease agreement. Such policies are usually purchased on a tight deadline. While this is not a problem, it becomes one when signing a renter’s insurance policy without knowing what it means.
If you have a named perils policy—your insurance covers only damage or theft that originate from the perils it specifically names.
An all risk policy will cover any and every peril, minus any specifically listed exclusions.
Remember this verbiage as it will come in handy when you go policy shopping. If you have a policy already and don’t know what kind it is and what it covers by reading the fine print or call your agent/company to discuss your coverage in person. If you come to the conclusion that it’s inadequate, go ahead and up your limits or add a rider for the coverage you wish to have. Those who reside in flood zones can and should purchase flood insurance as a rider or separate policy.
Be mindful that these are not the only scenarios in which you can have your claim denied. For example, you could have an actual cash value instead of replacement cost renter’s insurance, which means that you will be refunded only for what the item currently is worth, not how much it costs to replace it.
Another scenario in which your claim can be denied is related to the coverage limit—you may have exceeded this individual coverage limit on an extra-valuable item (such as a piece of jewelry or some high-end gadget).
If you live with someone—make sure they’re listed on the policy. Even if you have your own policy, if your unlisted roommate or significant other is the one who caused the damage, you’re most probably going to deal with the damage yourself.
Filing a claim is time sensitive—check with your insurer to find out what the specific timeframe is for your policy. Even though the timeframe varies from state to state and from policy to policy, the sooner you file your claim, the better.