Insuring High-Value Items on Your Renters Policy

By Shannon Ireland

What you don’t know about your renters insurance policy can hurt you, especially when it comes to insuring high-value possessions such as artwork, furs, jewelry or collectibles.

Renters policies typically cover those items — up to a point. Payouts for these items often have limits, which may come up short of the amount you’d need to replace your belongings. Fortunately, there are ways to make sure all your possessions receive adequate protection.

The case for renters insurance

If you’ve purchased renters insurance, you’re already in the informed minority. Only 37 percent of renters have insurance, according to a 2014 survey conducted for the Insurance Information Institute. Meanwhile, more than 95 percent of homeowners have home insurance.

The big reason for the disparity is that most homeowners don’t have a choice. Their lender requires them to have home insurance as a term of their mortgage, because it protects the lender in case of damage from fire, wind, hail and other covered perils. While some landlords require tenants to purchase insurance, it is not standard procedure.

Another reason many renters don’t purchase insurance is that they mistakenly believe that the landlord’s policy covers them. But the landlord’s policy protects the building and the landlord’s possessions within it – not renters and their belongings. For that, tenants need their own coverage.

Protecting high-value items

One of the reasons you purchase renters insurance is to protect your possessions – your furniture, clothing, electronics and other belongings. However, as mentioned above, standard policies can limit how much you’ll receive for particular items. Jewelry coverage might be limited to $1,000, for example.

If you own a family heirloom that’s worth, say, $5,000, you have two options:

Schedule an endorsement. An endorsement extends full coverage to the item as part of the policy. It often is the most economical way of making sure you have the protection you need, and it keeps all your coverage with one provider.
Purchase a personal articles floater. This is a separate policy, usually purchased from a company that specializes in covering high-value items. It will cost more, but there usually are no deductibles, and coverage can apply outside the home as well.

Either way, you’ll need an appraisal of your high-value items to document their value. The appraisal can be the beginning of a home inventory, which can help when you have to file a claim.

A home inventory is a room-by-room list of your possessions that should include photos of each item, their serial numbers, and receipts, if you have them. One of these sample forms can help you get started.

Replacement cost vs. actual value

When purchasing renters insurance, one decision you’ll be asked to make is whether you want to purchase replacement cost coverage or actual value coverage. There’s a big difference between the two:

Replacement cost. This type of coverage provides reimbursement for the full cost of replacing your possessions (minus your deductible). For example, if the television that you bought two years ago for $500 is destroyed in a fire, you could receive $500 to purchase a new television.
Actual value. This type of coverage factors depreciation into an item’s value. In our example, that television you bought two years ago for $500 is now worth only $300, so that’s the amount you’d receive to replace it.

Replacement cost coverage will cost more, but it could be worth the extra protection. One thing to note: If you schedule an endorsement or buy a personal articles floater for a high-value item, you’ll be covered for the appraised value.

Renters policies’ other benefits

In addition to protecting your possessions, renters policies offer liability protection in case someone is injured on your property and it’s your fault. In such a case, your policy would help pay for your legal defense and any award in the case, up to your policy limit. Many policies also provide for additional living expenses incurred if you have to find other living arrangements while your rental is being repaired or replaced after a covered claim.

Here’s the best part: coverage isn’t too expensive. Renters insurance premiums average a little more than $15 a month, according to a study this year by the National Association of Insurance Commissioners.

Don’t wait to protect your belongings

When you acquire new valuables, consult your insurance provider right away. The longer you wait, the greater the risk that your item(s) could be lost, stolen or damaged.

Protect your prized possessions by acting quickly. Bolster your renters insurance personal possessions coverage sooner rather than later, and get peace of mind knowing your valuables are protected.

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Note: The views and opinions expressed in this article are those of the author and do not necessarily reflect the opinion or position of Zillow.