Cooperator’s (Renters) Insurance: Why Our Residents Need It!

“What would you do in the event of a fire? How would you replace your personal property?’ If you ask your members those questions, how would they respond?

According to Claritas, a national demographics and market research firm, there are over 673,000 renters and cooperative households in Indiana. Unfortunately, only about 228,000 if those households (or 34%) carry renters insurance. The following offers persuasive information on why renters insurance is a necessity for each and every resident.

Resident Viewpoint: Why do I need renters insurance?
Choosing not to have renters insurance is a pretty big gamble. Without it, you may be faced with the cost of replacing your personal belongings after an event such as fire or theft. What’s more, you could face the prospect of defending yourself in a lawsuit because of an accident for which you might be held legally responsible. For about the price of a couple of pizzas a month (maybe even less if your insurer offers multi-line discounts), you can obtain affordable protection to cover your possessions.

Common Myths about Renters Insurance:
Affordability myth:
” I hear renters insurance is too expensive.” For just pocket change a day, a renters policy can provide affordable basic protection of your personal property and can protect you incase of a liability lawsuit.

Landlord myth:
” My co-op’s insurance provides protection for my belongings too.” Your co-op’s insurance typically covers the building where you live not your personal belongings and your liability

Responsibility myth:
"I don’t need liability insurance.” Your co-op’s policy most likely excludes liability for something occurring in your occupied residence. You could be held responsible for injury to another person or damage to another person’s property if an accident occurred within your occupied residence, or elsewhere. Without liability coverage, your current and future earnings could be at risk. Renters insurance may also provide legal defense costs.

Ownership myth:
“I don’t own very much.” Most people’s belongings are often worth more than they think. That’s one reason why you need renters insurance. It’s important to know how much you need.

How much do I need?
The amount of coverage you need depends on how much your personal property is worth. You may think your belongings aren’t worth much, but the average person has over $20,000 worth of personal property that’s probably not covered by a coop’s primary policy. To determine how much insurance coverage you need take a complete inventory of your personal items.

An insurance agent can help you with this by estimating the total value of your property.

This chart shows an example of typical personal property replacement values for a two-bedroom apartment. Your values may run more or less.

Personal Property Replacement Value
Furniture $8,907
TV, VCR, Stereo, Tapes, and CDs $1,777
Home Computer $1,647
Microwave $ 151
Other Appliances $240
Clothing $3,700
Paintings, Prints, Photos $ 792
Glassware, China, and Silverware $612
Sports Equipment $600
Cameras and Photographer’s Equipment $795
Books $704
Jewelry $1,023
All Other Property $4,000

How do I take inventory?
List each item, when you acquire it and the purchase price or current value.
Total up the amounts of these items to give you a rough idea of what your property is worth.

Once this is done, put your inventory in a safe place away from home—for example in a safe deposit box.

Consider adding photos to your inventory. They can help if you have a claim.

What about my jewelry? Is it covered?
Coverage for certain types of property has a dollar limit. Here is a typical list of the types of property that may have “special limits” in a renters policy:
Money, bank notes, coins
Business property (on and off premises)
Securities, negotiable instruments
Watercraft, including trailers, furnishings and equipment
Trailers (other than boat trailers)
Jewelry and furs
Firearms (limitation applies to theft only)
Silverware and gold ware (limitation applies to theft only)

If you have this type of property, you may need special coverage either an endorsement or a personal articles policy. Ask your insurance agent about these items. You will also need to decide whether to opt for depreciation or limited replacement cost coverage.

What is the difference between depreciated coverage and limited replacement cost coverage?
Depreciated coverage is the cost to repair or replace your belongings minus depreciation. Let’s say you bought a quality sofa with an expected useful life of 10 years. If it’s now five years old and would cost $1,000 to replace, you could expect to receive about $500 (minus your deductible) it your sofa was destroyed by fire.

You would pay slightly more premium for limited replacement cost coverage, but you could expect to receive $1,000 for your sofa minus your deductible.

What are my options with deductibles?
The deductible is the portion of a covered loss that is your responsibility. Although deductibles vary by state, they are typically available in amounts such as $250, $500, or $1,000. For example, if you had a $500 deductible you would need to pay $500 of the covered loss.

Generally speaking, higher deductibles lower your premium, but increase the amount you must pay out of your own pocket if a covered loss occurs. Ask yourself how much you are willing to pay in order to save on the premium.

Will renters coverage pay for a motel or other temporary lodging if a fire forces me to move from my apartment?

Renters insurance policies typically include Additional Living Expense coverage. If you are forced to live elsewhere because your residence is damaged by a covered loss, the policy covers the actual loss incurred for increased expenses over and above what you normally spend for food, shelter and related items for the shortest time required to repair or replace the premises.

Final Note
Remember, you may not physically own the building in which you live, but you still need insurance to protect your property in the case of fire, theft or other hazards.

Note: Reprinted with the permission of the Author, Peg Smith, 2550 Northwestern Ave., West Lafayette, IN 47906

Volume 1, Issue 2
May, 2003