IF YOU RENT, your landlord's insurance does NOT cover your personal property or you clothes, stereo, furniture, television, bicycle, jewelry, personal computer, artwork and other items against destruction or loss. Renters insurance, however, gives you both property and liability coverage.

Renters insurance will protect you against losses due to: fire or smoke, lightning, vandalism, theft, explosion, windstorm, water damage from plumbing.

Renters insurance will also cover you if someone slips and falls in your home or is injured by any of your possessions and then sues. The insurance should cover your responsibility to other people injured at your home or elsewhere, and includes legal defense costs if you are taken to court.

Common Questions

• Q. Does renters insurance cover all of my possessions?
  A. It depends. Some possessions -- jewelry, computers -- are often subject to a per-category theft limit (for example, some policies have a $5,000 limit for computers). When seeking information on renters policies, ask about the various category limits and how they apply to expensive items you own. You may purchase a floater, providing additional coverage for specific items not included in your basic policy.
  
• Q. If I file a claim, will my policy be canceled?
  A. Your rates could change. If you are not responsible for the loss or damage to your items, your insurance should not be affected. If you were at fault (caused a fire by smoking in bed), the insurance company might consider that when setting the price for your next policy. Your company might consider the number of losses, regardless of fault, also.
• Q. Is my property covered away from home?
  A. Yes, but coverage may be limited. Restrictions in terms and the amount of coverage might apply (from 10 percent of your personal property coverage to full value). Ask your agent for details. Your liability coverage does not change.
• Q. As a student, am I covered by my parents' policy?
  A. If you are attending college, under 26 and your parents have a homeowner or renters insurance policy, their insurance may give you LIMITED coverage in the dorm, but not if you live in an apartment.
• Q. Can I purchase a renters policy with my roommates?
  A. If you live in a group house or share an apartment and want to purchase renters insurance, be aware that the regulations vary state to state, and policies vary significantly from company to company. Find out what regulations apply in your state. Then, shop around to find an insurance company that can accommodate your situation. Also, find out whether your policy needs to be updated if you get a new roommate or if all your roommates need to be named under the policy.
• Q. What about unmarried couples?
  A. Some insurance companies now allow unmarried couples who have been living together to obtain coverage. Some policies automatically extend coverage to any future resident of a policyholder's household who fits the definition of domestic partner.
• Q. What happens if my rented or borrowed items are stolen?
  A. Items that are "in your possession" are covered under a standard renters policy.
• SQ. What if my insurance company does not respond to a claim?
  A. Your state insurance department or local consumer protection office can answer questions on filing claims and also take complaints. (See back of this brochure for insurance department telephone numbers.)
• Q. Is my bicycle or car covered by renters insurance?
  A. Your bike is protected by a standard renters insurance policy. Motor vehicles are not covered. A separate insurance policy is needed to protect your car, van or motorcycle.

How Do You Buy Renters Insurance?

1. Take an Inventory. Before purchasing, make an itemized list of everything you own with price estimates and purchase dates (if possible). Your inventory will help ensure that you purchase the right amount of insurance -- not too much or too little. Also, an inventory will help make filing a claim easier. Make copies of this inventory and keep it in a safe place outside of your home (at work, in a safe-deposit box or friend's house). Take photographs of each item; this can be helpful when filing a claim.

2. Ask About.

• A. Theft Limits: For example, most renters policies have a $1,000 total limit on jewelry that is stolen, a $3,000 - $10,000 limit for computers and $2,500 - $10,000 for silverware or flatware. Policies vary -- so ask. Ask for a list of standard coverage limits so you know whether you'll need to buy a floater, which provides additional coverage for some of your items.
  
• B. Cash or Replacement Value: Your policy can insure possessions one of two ways -- for either the cash or the replacement value. Cash value coverage takes into account the age and condition of items at the time of damage or loss. Replacement value pays today's cost of a new item. For instance, if your five-year-old TV is stolen, a cash value policy will pay part of the original purchase price while a replacement policy will pay the current price of a comparable set. Replacement value policies tend to cost more, and there may be other requirements as well.
  
• C. Deductible Options: Find out about the deductible -- your out-of-pocket cost. The lower the deductible, the more the policy will cost you.
  

3. Seek Discounts. Insurance companies frequently offer discounts to their auto policyholders interested in buying a renters policy from them. You also may be eligible for discounts if your apartment or home has a security system, smoke detectors, or deadbolt locks. Additional discounts may be available depending on your age or whether you are a non-smoker. Policies vary. Examine as many options as possible.

4. Shop Around. Find an insurance agent or insurance company representative with whom you are comfortable. Ask friends or relatives or consult the yellow pages. Call a variety of insurance companies and agents. Ask questions. Keep your inventory handy, so you can find the amount of coverage that is most appropriate for you ($16,000 is usually the smallest amount of coverage you can get).

5. Read Your Policy. An insurance policy is a contract between you and your insurance company. Read the policy carefully -- if you have questions or if something is unclear, call your insurance company representative. Don't sign the contract unless you fully understand the company's responsibilities as well as your own. An insurance policy spells out several obligations for both you and the company. For example, the company has a duty to defend the insured renter in court if the renter is sued. On the other hand, you must give the insurer complete, accurate and timely information.

Glossary of Insurance Terms:

Actual Cash Value:Cost to repair or replace property, taking into consideration age and its condition when it was lost or damaged (Equal to replacement cost minus depreciation.)

Agent:An insurance salesperson. (a) An independent agent does not work for any insurance company and sells the policies of more than one insurer; (b) An exclusive agent sells the policies of only one insurance company.

Claim:A person's request for payment by an insurer for a loss covered by a policy. Your claims to your company are "first-party claims." Claims made by one person against another person's company are known as "third-party claims."

Conditions:Part of an insurance policy that states your obligations and those of your insurance company in order for the policy to be in effect.

Deductible:The amount that you agree to pay, out of pocket, per claim or per accident. This is subtracted from the total amount paid by your insurer. If the claim is $500 and your deductible is $100, you pay $100 and your company will pay $400.

Depreciation:Reduction in the value of property due to age and use.

Domestic Partners:A term used in some states, such as California, to describe an unmarried couple living together.

Endorsement:Attachment to policy that adds to or changes the contract's original terms.

Floater:Additional coverage for items not otherwise included in the basic policy (such as jewelry or antiques).

Insurance Department:Enforces rules for the insurance business in each state. Valuable source of information about all types of insurance": also handles consumer inquiries and complaints.

Insurance Company:A company, which in exchange for a fee (known as a premium), agrees to pay all legitimate claims that may arise under your policy.

Inventory:A list of your possessions and their value. Items on the inventory should include furniture, rugs, drapes, artwork, china, appliances, books, clothes, jewelry, compact discs, records, tapes, linens, and musical instruments.

Liability:A legally enforceable financial obligation.

Liability Coverage:Insurance which pays the losses of other people to who you unintentionally or through negligence cause injury. (a) Bodily injury liability coverage pays medical costs of others and your legal defense costs if you injure or kill someone; (b) Property damage liability coverage pays claims against you if you damage someone else's property.

Negligence:Failure to exercise a generally acceptable level of care and caution.

Peril:Cause of loss. (Examples: fire, theft.)

Personal Property Insurance:Protects against the loss of, or damage to, possessions caused by specific perils.

Policy Period:The amount of time an insurance contract (policy) lasts.

Premium:The amount you pay for insurance coverage.

Policyholder:The person who buys insurance.

Proof of Loss:Documents that you give to the insurer to support your request for payment of a claim. The company uses these documents to determine whether and how much it will pay. (Examples: written repair estimates, police reports.)

Replacement Costs:Cost to replace property without regard to age or condition of the original item.

Theft Limit:The highest amount an insurance company will pay on certain items that are stolen from you home. For instance, some policies have a $5,000 limit for computers. If an item would cost more than the limit to replace, you may need to purchase supplementary coverage.

How Do You File A Claim?

As soon as you become aware of a loss, write down everything the date, time of day, list of goods stolen or damaged. Call the police as soon as possible. Then, contact your insurance company or agent to report the loss and get the appropriate claims form. Written and documented reports of losses are especially important when theft is involved. Include everything and carefully assess damages: amended claims could take longer to pay.