If you’re renting your home or apartment, chances are you have renters insurance. Most landlords require it. Considering how cheap most policies are, it’s foolish not to sign up. Even though your landlord is responsible for damage to the structure of your home, they aren’t responsible for you or your belongings. Extra coverage is necessary.
But under what circumstances, exactly, does renters insurance cover theft?
Renters insurance typically includes three types of coverage: Personal property, liability, and loss-of-use. Personal property covers your belongings; liability covers guests in your home or accidental damage to the neighbors’ property. Loss-of-use covers things like hotel bills and storage costs if your home becomes uninhabitable.
Theft, however, is a unique situation. You’ll have to file a police report before doing anything with your insurance. The details they collect go a long way in determining whether or not a claim will pay out – so be as accurate as possible.
The Liability Clause:
Theft claims mostly depend on the personal liability clause of your policy. Thankfully, in the case of theft, most belongings are covered. Furniture, clothing, jewelry, and electronics are generally covered under the liability clause – up to a coverage limit. The claim does top out at a certain point, though. So it’s essential to have a sense of your belongings’ total market value. And to obtain secondary insurance for high-value items that exceed all, or a significant portion of, the coverage limit.
There are only a few instances when theft isn’t covered by renters insurance. For example: if your bag were stolen on the subway: you’re covered. But if you check your luggage on an airline and the bags are stolen? Renters insurance won’t cover it – because your item was in possession of a third party. In that case, you’d file a claim with travel insurance.
But the worst-case scenario is if your insurer decides that the theft happened due to negligence. Like, if you left your keys in the door… If your insurer thinks you passively allowed it to happen – they’ll probably deny your claim outright. Ignorance is no defense when dealing with a claims adjuster.
Replacement Cost vs. Actual Cash Value:
It’s one of the most common discrepancies between plans. If you have good insurance, they’ll cover the replacement cost of items, minus the deductible. If you have crummy insurance, they’ll only cover the “actual cash value.”
Replacement cost is the market price: the dollar amount this product would cost, new, in-store. Today – not when you bought it. But actual cash value is the replacement cost, minus depreciation.
The difference between them is, roughly, the cost of that item on Amazon vs. eBay.
Special Cases – Asset Theft, Cash, and Family:
Unfortunately, renters insurance doesn’t cover damage or theft involving your vehicle – even when it’s parked on your property. A car can only be insured separately by an auto insurance policy. However, it does cover personal belongings while they’re stored in a vehicle. So if your car gets broken into and you lose your laptop – you’d file a claim for the broken window and stolen stereo through auto insurance, but claim your stolen laptop through renters or homeowners insurance.
Renters insurance also covers stolen cash, but only up to a measly $200. But, think about it: if it were that easy to claim more money, why wouldn’t you? It’s stolen – there’s no proof. It makes insurance fraud too easy.
And finally: a renters policy automatically covers anybody related to you by blood, marriage, or adoption. If you live with a partner, you can still get the same protection by adding them to your existing policy as an “additional co-insured” for a small additional fee.
In any case – renters insurance isn’t just a practical choice – it’s a necessary choice. In 2020, property damage and theft made up 97.2% of all claims to insurance companies. One hopes, with insurance, that you never have to use it. But if you do, chances are it’ll be for this.
