Jim WinsettQ. My husband and I rent an apartment, should we purchase Renters Insurance?
A. In a current poll, the Insurance Information Institute found that 95 percent of homeowners had homeowners insurance. However, only 37 percent of house, apartment and condo renters had insurance. The good news is that the number has increased every year the poll has been taken.
Some renters may mistakenly assume that the landlord's insurance will cover their possessions.
"While your landlord may be sympathetic to a burglary experienced or a fire caused by your iron, destruction or loss of your possessions is not usually covered by your landlord's insurance," the Insurance Information Institute says on its web site.
Some may decide their possessions aren't valuable enough to insure. There are, however, other types of coverage included in renters insurance that they should consider.
Liability protection covers the renter's responsibility to others who are injured in the home or elsewhere by the renter, a family member or a pet. Renters insurance also covers additional living expenses incurred when the home cannot be occupied because of a fire or other covered peril.
There are two types of renters insurance. Actual Cash Value coverage pays to replace possessions, minus a deduction for depreciation, up to the limits of the policy. Replacement Cost coverage pays the cost of replacing possessions with no deduction for depreciation, up to the limits of the policy. It costs about 10 percent more than Actual Cash Value coverage.
Since it doesn't cover the building, renters insurance is relatively inexpensive. The average premium nationwide was $187 in 2011. The rate will vary by State you are in, Tennessee or Georgia.
Insurance Information Institute has a checklist of questions to ask when shopping for renters insurance, including:
• How much insurance should I buy? Have enough to replace all personal possessions in the event of a burglary, fire or other disaster.
• What disasters are and are not covered? Renters insurance covers losses due to fire or smoke, lightning, vandalism, theft, explosion, windstorm and certain types of water damage, such as an upstairs tenant leaving the water running in the bathtub that floods the renter's apartment. Most policies don't cover actual floods.
• What's the deductible and how does it work? The higher the deductible, the lower the premium.
• Do I need extra coverage (called a "floater") for expensive jewelry, musical equipment and collectibles? Most policies provide limited coverage for such items.
• Do I have enough liability insurance in the event someone sues me? This coverage pays for the cost of defending the policyholder and any awards, up to the limits of the policy.
Renters insurance typically provides limited coverage for business equipment, so people who run businesses out of their home may need to buy more coverage. They may also need more liability insurance and coverage for lost income.
Most renters' policies include "off-premises" coverage, which means possessions are insured for covered disasters that occur outside the home - for example, when traveling. They may limit the amount of theft coverage, however, so renters who travel a lot may want to buy additional coverage.
Finally, insurance companies often offer discounts for having multiple policies with them. They may also offer reduced rates if the renter is over 55, has a security system, good credit, or for other reasons.
Jim Winsett is president of the Better Business Bureau of Chattanooga.