Out of Pocket : Uninsured Renters May Find They Have to Pay for Riot Damage to Personal Property
Renters whose apartments or houses were damaged by fire or vandalism during the Los Angeles riots may be in for a devastating surprise if they don’t have tenant’s insurance.
Landlords are responsible for the structure, not for replacing personal property that may have been stolen or destroyed.
And the majority of people renting apartments, condos or houses will have to pay for their losses, insurers say, because most renters don’t have tenant’s insurance to cover their personal possessions.
Nationwide, only about one-fourth of renters carry tenant insurance, according to a 1990 study by the Insurance Information Institute in New York.
“A lot of people mistakenly believe that renters are covered by the landlord of the building,” says Richard Donegan, Allstate’s regional underwriting manager for the Los Angeles metropolitan region. “They think the landlord takes care of the contents (of the apartment or house). That’s just not so.”
Adds Brenda Smith of State Farm Insurance: “A landlord is responsible for the structure itself and for drapes and carpeting and fixtures if they came with the apartment. But not for the property of the tenants.”
Renters who had insurance to cover damage and/or theft during the three-day upheaval can collect for losses under a clause called “riot or civil commotion,” which normally is included in standard renters or homeowners policies.
But Julie Davine of the Western Insurance Information Service, a nonprofit center in Los Angeles, cautions that renters need to check with their insurers. While “urban unrest, a riot or civil commotion” should be covered in a basic renter’s policy, she says, it is not automatically included.
Tenant’s insurance is not normally a high-priority item, according to Davine; most people wait until after they’ve been burglarized or had other unexpected losses to buy it.
“If it happens to you, then you go out and get insurance,” Davine says. “When I had my first apartment, all my jewelry was stolen. Then I got insurance. It’s also a good idea to have coverage for increased living expenses in case you have to leave your apartment and stay at a hotel.”
An information-service booklet lists the following as standard coverage in most renter’s policies: losses from fire or lightning; windstorm or hail; explosion; riot or civil commotion; aircraft; vehicles; smoke; vandalism or malicious mischief; theft; falling objects; weight of ice, snow or sleet; volcanic eruption; sudden and accidental tearing apart; cracking, burning or bulging of a steam or hot water heating system or of appliances for heating water; accidental discharge, leakage or overflow of water or steam from within a plumbing, heating or air-conditioning system or domestic appliance; freezing of plumbing, heating and air-conditioning systems and domestic appliances; sudden and accidental injury from artificially generated currents to electrical appliances, devices, fixtures and wiring--not including television and radio tubes.
A basic renters policy averages about $150 a year nationwide, says Ruth Gastel of Insurance Information Institute. But “if you have an outstanding, expensive piece of jewelry . . . ,” Gastel adds, “you would have to get a floater to have it insured separately. That wouldn’t be part of the regular renter or homeowner coverage.”
In the Los Angeles area, however, renters insurance is a little higher than Gastel’s national figure, ranging from $200 to $300 a year, depending on the kind of coverage. If you want full replacement value for your possessions, the policy is more expensive.
Under standard coverage, a stolen television is depreciated depending on its age, as are other household items and possessions. With a standard policy that insures you for actual cash value, you might get $500 for a sofa that cost you $1,000 three years ago. With a replacement cost clause, you’ll get $1,000 or whatever it would cost to buy a comparable sofa.
“There’s going to be a big difference if you want to replace your 5- or 10-year-old TV with a new one,” says Allstate’s Donegan. “The old set is depreciated and you won’t get enough to replace it. Replacement (coverage) costs more for a lot more protection. People need to evaluate what they have and then design their own policy.”
If you live in Venice, for example, Allstate’s basic renter’s policy would cost $260 a year to insure $20,000 in contents, $100,000 in liability and $1,000 for guest medical. That standard policy has a $250 deductible. The same coverage with replacement cost of items is $323 a year.
For that same Venice renter, a State Farm replacement cost policy--with a $250 deductible and coverage for $25,000 in contents, $300,000 liability, $1,000 medical payment to others, $1,000 for jewelry, $2,500 for silver and gold, and $2,500 for firearms--would run $326 yearly, says Smith.
A standard renter’s package through Farmers Insurance Group averages about $200 to $300 in the Los Angeles market, says Farmers’ John Millen. That would include basic coverage of $20,000 to $25,000 in contents, $100,000 liability and $500 for jewelry. Farmers’ minimum for contents is $7,000.
The condition of your rental unit may also affect your premium or may even prevent you from obtaining coverage. Insurance company representatives make thorough inspections before a policy is issued.
“Our agents look at everything,” says Smith. “The age of the building, where it is, how near fire hydrants are. That’s all part of the rating process to see if the agent feels comfortable even writing the policy. Premiums can vary widely because of all these different factors. . . . In any situation, it’s best for consumers to go out and shop around.”
Donegan adds that many consumers tend to underestimate the value of what they have: “If they have a loss and they start counting the pairs of socks, underwear and spoons they have, it adds up to a lot more than they thought.”
