What Renter’s Insurance Does Not Cover

Renter’s insurance is a must-have for tenants who are about to sign a new rental contract, much the same way that homeowner’s insurance is essential for property owners.

Unlike homeowner’s insurance, however, renters are not obligated to purchase renter’s insurance. As a result, renters much too often think that they do not really need renter’s insurance and they can just forgo the extra cost. In reality, renter’s insurance can save you thousands of dollars in lost personal property or liability issues if a covered disaster were to damage your personal possessions. Depending on the coverage type and amount of your renter’s policy, you may even be able to receive insurance funds for living expenses during disasters that make your home unlivable and therefore require you to spend extra money on temporary housing.

While typical renter’s insurance plans cover most types of personal possessions, some types of belongings require a special rider or simply cannot be insured with this type of policy. Along the same lines, your possessions are protected with renter’s insurance, only if they are lost or damaged due to certain types of disasters. Not every emergency can be covered by your renter’s insurance, especially any instances deemed non-accidental.

If anyone else was involved in the loss of damage of your belongings, your renter’s insurance plan may not provide coverage either. If you are thinking about buying renter’s insurance, make sure you understand how renter’s insurance works and what it does and does not cover before you come to a final decision about what sort of policy might be right for your specific needs.

Policy Differences

Almost all American renter’s insurance policies, also known as HO4 or HO-4 insurance policies, provide basic coverage for your personal possessions that are not already protected by other insurance or that are explicitly not part of the policy. This coverage is capped at a certain total amount and sometimes places caps on individual covered belongings as well. Comprehensive renter’s insurance plans also include some form of liability insurance that would protect you from having to pay the costs from any legal proceedings brought against you, if someone was accidently hurt in your home for example. Full coverage also usually includes some form of additional living expenses (ALE) coverage that would provide you with funds to cover necessary living expenses for a short period if you were to have to find temporary housing because your primary rented housing is unlivable for some covered reason.

Like any other type of insurance plan, your renter’s insurance policy will protect you up until the limit of coverage you have purchased. The way that the insurance provider may calculate how much money you should receive after filing a claim, however, is usually one of two methods. Some policies provide an actual cash value (ACV) payout, meaning that a policyholder will receive the current cost for the item that was lost or damaged, depreciated from its original brand new cost. Replacement cost plans, on the other hand, provide policyholders with payouts for claims that are high enough to purchase the item or its equivalent new at current market rates. ACV plans tend to have lower annual premiums and claim deductibles.

What types of disasters or damage are not covered by renter’s insurance?

Renter’s insurance policies will cover most of your personal possessions yet only if they were lost or damaged due to an insured disaster. For most policies, covered disasters for renter’ insurance include damage caused by theft, vandalism, riots, vehicles or aircraft, falling objects and explosions. Damage caused by water overflow is covered in specific instances, like when the plumbing or air conditioning system breaks. Similarly, the freezing or overheating of plumbing systems and related systems is included in most renter’s insurance plans. Many types of natural disasters are also included in the typical renter’s insurance policy, with damage from fire or smoke, wind or hail, lightening, volcanic eruption and weight of ice, snow or sleet all qualifying for insurance reimbursement.

A few different types of situations are categorically excluded from most HO4 renter’s insurance plans. These excluded situations include damage caused by:

  • Negligence: when the policyholder fails to protect his or her property in a reasonable manner
  • Intentional loss: damaging or losing your possessions on purpose in order to receive insurance funds is illegal and fraudulent
  • Government seizure: property damaged or confiscated by government authorities is not covered by most renter’s insurance policies
  • Earth movement: like mudslides, earthquakes and landslides cannot be used to file claims in most renter’s insurance policies; some locations also require additional, separate insurance for wind protection
  • Floods: generally covered under separate flood insurance policies and therefore not protected by renter’s insurance policies
  • War: beyond what insurance providers can take responsibility for and therefore cannot be used as a basis for filing a claim
  • Nuclear hazards: like war, cannot be used to file claims with a renter’s insurance policy
  • Damage caused by others: If someone from outside your family damages your property, his or her insurance is responsible for reimbursing you in most cases.
  • Damage caused by insect or animal infestation: Whether are dealing with damaged property due to termites, bed bugs mice or any other living creature in your rental property, your renter’s insurance plan probably will not cover it.

What types of possessions are not covered by renter’s insurance?

While most of your personal belongings will be automatically included in whatever renter’s insurance policy you choose to purchase, some types of possessions are typically excluded for various reasons. Similarly, you may not be protected in every situation that comes up, especially those involving other people or their property. Here are some of the most common exclusions for covered items or situations with the most common renter’s insurance plans:

  • Medical bills: Liability protection in some renter’s insurance plans will pay someone else’s medical bills if they are hurt on your watch, but not your own.
  • Certain pets: Damage or injury caused by certain pets or certain breeds of dogs may not be covered without passing a behavioral test.
  • Criminal behavior: Damage or injury that is renter does not cover the result of purposeful, criminal activity’s insurance.
  • Expensive antiques, jewelry, bicycles or other high value items: Very costly items are usually only covered to a limit or excluded completely. Oftentimes, no single covered item in the policy should exceed 10 percent of the total value of the policy. You can usually add a rider with coverage specifically for that item at a low cost.
  • Too many electronics: Some renter’s insurance policies put a cap on the amount of insurance coverage that you can dedicate to electronic equipment.
  • Personal possessions of roommates: Unless they are named on the policy, your roommates, sub-letters and Airbnb guests are not covered by your renter’s insurance policy. Family members and your guests are usually covered.
  • Business equipment: Business materials are generally protected under other types of insurance plans, though many renter’s insurance policies do cover a small fixed amount of business expenses.

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