26 Nov Don’t count on your landlord’s insurance policy

 Q. My son is getting his first apartment, and I’ve been telling him to get renter’s insurance. What should he make sure the policy offers?

A. Many renters wrongly believe that their stuff is covered by a landlord’s insurance policy. That’s probably not the case, so it’s important to have your own renter’s policy.

“Renter’s insurance will cover your belongings from damage and destruction as well as theft,” said Altair Gobo, a certified financial planner with U.S. Financial Services in Fairfield. “Some policies will even provide liability coverage in the event a guest is injured while in your apartment or if their property is damaged while on your premises.”

But before you buy just any policy, you need to do some research.

The average renter’s insurance in the U.S. is around $200 annually, said James Marchesi, a certified financial planner with Mill Ridge Wealth Management in Chester. But, he said, different policies have different benefits.

Start by taking a detailed inventory of your belongings, and keep a copy, along with pictures of valuables, in a safe file, he said.

Marchesi said where you live and how much property you are insuring are the key elements to determine the cost of your coverage.

Policies usually cover property in one of two ways: providing the actual cash value or replacement value of the object.

“Actual cash value pays what the object is deemed to be worth at time of the loss. For example, if you paid $800 for a laptop a few years ago, its value would be less today, resulting in a lower claim payout,” Marchesi said. “Replacement cost coverage pays out the equivalent cost if you were to go out and buy a laptop today.”

Obviously, replacement cost coverage requires a higher premium payment than a policy with actual cash value coverage.

The other aspects of renter’s insurance don’t deal with property. For example, certain policies will provide payment for living expenses if you are displaced from the unit for covered events, such as fires, Marchesi said. You need to determine the importance of these types of non-property coverages.

Liability would be another consideration, he said.

“If someone comes into your apartment and trips over your rug, that could be a liability issue,” Marchesi said. “Generally, policies include up to $100,000 liability coverage. Most policies let you increase that amount, say, up to $300,000, which, in today’s world, would seem to be a logical choice.”

You also need to consider exactly how the policy would cover your valuable items because most policies will have a cap on certain items.

“If you have any high end items — jewelry, electronics — you may want to get a rider that will include them specifically,” Gobo said.

If you price the policy you need but the cost seems a bit high, there are some ways to save without losing the coverage.

Marchesi said paying your premium annually versus monthly — if you can come up with a lump sum — should save a few bucks on the premiums.

Also take a look at your deductible options, he said. The higher the deductible, the lower the annual premium. Just make sure you’re able to afford the higher deductible amount.

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This story was first posted in November 2014.