For at least a decade, I’ve been sending a small annual check to Allstate for renters insurance.
Luckily, I’ve never had to make a claim. (I’m knocking on this pressboard table, just to be safe.)
But I’ve always wondered: If I did make a renters insurance claim, what would happen? Would the insurance company respond quickly?
Would they believe me when I told them just how many Apple devices got burned or burgled? And what’s covered, anyway?
My friend Susann Rutledge, who lives in New York City, had the opportunity (if we can call it that) to make a renters insurance claim earlier this month.
A fire broke out in an apartment on the floor below hers. The hallway outside her door filled with black smoke.
“I put on shoes, grabbed my purse, and climbed out my window—which was not fun,” says Rutledge.
She went down the fire escape to the second floor. The ladder was stuck, painted over too many times. Eventually the superintendent climbed up his own ladder and helped her down.
The fire destroyed two apartments.
Rutledge’s apartment wasn’t seriously damaged, but the fire department had opened her door to check for people or animals, and tendrils of smoke spent some time inside, treating the place like a piece of slow-cooked beef brisket.
“My apartment stank,” she says. “None of this was devastating, but there was definitely a fine layer of soot in the kitchen and the living room.”
Rutledge called MetLife the following morning.
They reminded her of her $250 deductible, asked whether the apartment was habitable (all renters insurance pays for a place for you to stay, up to a limit, if your home is uninhabitable), and called a restoration company.
One of the joys of renters insurance, she learned, is that you don’t have to figure out who to call for cleanup. The outfit sent by MetLife only works with insurance companies, anyway.
The cleaners showed up promptly and cleaned Rutledge’s stuff, particularly her sofa, which had inhaled a lot of smoke. They didn’t clean everything, however.
“They made it clear that this is renter’s insurance, this is for my possessions,” says Rutledge. “They weren’t cleaning the walls, the kitchen counters.” That’s the responsibility of the building owner.
The claims adjuster put it this way: “If you could pick up the apartment and shake it, anything that falls to the floor, that’s what they clean.”
Everything was done by the end of the week, four days after the fire.
Rutledge doesn’t know much the cleaning service charged above the $250 deductible, because she never saw the bill.
Her opinion on renters insurance? No surprise: “I think people should have it.”
Questions and answers
Not everyone has such a smooth experience with renters insurance claims, but I’ve talked to enough people to know that Rutledge’s experience was typical.
But I still had questions.
With the help of Shane Secord, owner of Secord Insurance Agency in Seattle, I have answers.
How much do renters insurance policies vary in price and coverage? Do I need to shop around carefully?
Prices and coverage rarely differ much from one insurance company to another.
Renters insurance policies are almost always based on a model policy supplied by the International Standards Organization (ISO).
The basic policy, which most renters choose, covers between $20,000 and $30,000 worth of stuff.
If you have more stuff than that, you can buy more insurance.
Can I compare prices online, like for auto insurance?
Not that I know of.
But, like I said, the price of renters insurance varies little between companies.
It’s a very boring, standard product. In the world of insurance, that’s a good thing.
Is my diamond ring covered?
Okay, this wasn’t actually my question, because I don’t have a diamond ring. I’m more of a tennis bracelet kind of guy.
If you have an expensive individual item and want it insured, you need to list it separately on your policy, along with an appraisal (for jewelry), photo, and serial number (for electronics or musical instruments).
Naturally, this will increase your premium.
How about my smartphone?
Yes and no.
Renters insurance covers “named perils” like fire, theft, water damage from a burst pipe, or vandalism.
If your phone is stolen from your apartment along with other stuff, it’s covered.
If you just misplace it or drop it in the toilet, it’s not covered, and the phone itself probably costs less than your deductible, anyway.
Incidentally, the insurance industry has a delightful term for lost items than don’t fall under one of the named perils: “mysterious disappearance.”
My punk band’s guitar, drum kit, and synthesizers?
Depends how punk you are—that is, whether your band is a profit-seeking enterprise.
“If they’re used for professional gain, they might be excluded entirely,” says Secord. Business equipment requires commercial insurance; renters insurance won’t help you.
Not in a band?
You’ll also need to think about this if, say, you have a business selling crafts on Etsy and deduct your computer as a business expense.
And if you take the home office tax deduction, the stuff in your home office probably isn’t covered by renters insurance.
Are floods and earthquakes covered?
Private flood insurance in the US doesn’t exist, but if you live in a flood-prone area, you can buy it through the federal government. Find out more at FloodSmart.gov.
Some insurance companies offer earthquake coverage (aka an “earthquake rider,” which is a great idea for a Nicholas Cage move) for an additional fee. Some don’t.
If you live in earthquake country, it seems silly not to spring for it, since the additional coverage is cheap, and a severe earthquake could wreck a lot of stuff and make your apartment uninhabitable.
Furthermore, if an earthquake causes a fire, the fire damage won’t be covered unless you have an earthquake rider.
While we’re on the subject of water damage, Secord pointed out that renters insurance only covers unexpected losses.
“Say you’ve got a shower wall that’s got black mold on it that’s leaking, and then it starts pouring out from underneath,” he says. “Those types of claims get shut down because there’s a maintenance issue that’s being ignored.”
Do I need a home inventory?
Strictly speaking, no.
But if your apartment is burgled, the insurance company isn’t going to just cut you a check for $20,000. They’re going to want a detailed list of what was taken and what it will cost to replace it.
A home inventory video is the best way to provide this.
Since you have a video camera in your pocket (assuming it wasn’t the victim of a Mysterious Disppearance), all you have to do is walk through your home, describing each item and how much it cost.
Upload the video to Dropbox or another cloud storage site.
Do you also need to save receipts or keep a painstaking written inventory?
“Most customers can’t produce receipts, and adjusters say a picture’s worth a thousand words,” says Secord.
Is the insurance company going to believe me when I make a claim?
Insurance adjusters are trained to spot fraud, and they have a special investigation unit to send in if they’re suspicious.
(It seems like there must be a reality show about this, right? Adjusters: SIU.)
But this is very uncommon. Be honest, and you’ll almost certainly avoid the cavity search.
You keep saying “apartment.” Does this apply to rented single-family homes, too?
Again, it’s the stuff that’s in the house that’s covered, not the house itself or its permanent fixtures.
If I make a claim, is the insurance company going to hike my premium?
From the company’s perspective, a history of claims is the best predictor of future claims.
Some companies guarantee not to raise your rates or cancel your policy unless you make more than one claim during a certain period of time.
It’s worth asking about when you buy your policy.
How long will it take to get my claim paid?
Rutledge’s experience is typical: a majority of claims are paid within one week, and a majority of the rest are paid within two.
Other questions about rental insurance? Ask us in the comments.
Got a story about making a renters insurance claim? Tell it below.
Thanks also to Devin Engelmann at Secord Insurance Agency.
Matthew Amster-Burton is a personal finance columnist at Mint.com. Find him on Twitter @Mint_Mamster.