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Does Renters Insurance Cover Natural Disasters?

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  • Does Renters Insurance Cover Natural Disasters?

Renters insurance covers some natural disasters. Your personal belongings are covered if they’re damaged or destroyed by a hurricane, tornado, unexpected home fire, rain or hail. But natural disasters like floods, earthquakes and sinkholes are usually excluded.

Plus, if you opted for the additional loss of use coverage in your renters insurance policy, you could also be reimbursed for additional living expenses you incur if one of the covered natural disasters damages your rental, forcing you to temporarily move out while it’s being repaired.

Unlike other home insurance policies for landlords and homeowners, renters can include certain coverages they think they’ll need and exclude those coverages they may not need. Renters may also be vastly undercovered in many situations, so it’s important to know what is and isn’t covered by your policy. Let’s take a look at all the different ways you may or may not be covered by your policy for natural disasters.

Personal Property Coverage

The most standard coverage in all renters insurance policies is personal property coverage. Also called Coverage C within your policy, personal property coverage is the part of your policy that pays to repair or replace your possessions if they’re damaged or destroyed by a covered peril.

These possessions must be either kept inside your home or, if you rent a house, on the property. Coverage extends to items like furniture, clothes, electronics, kitchen utensils, lawnmowers and tools. You must choose to insure your belongings for their replacement cost or their actual cash value.

The coverage you choose not only dictates how much money you’ll receive to replace your damaged or destroyed belongings, but it also helps to determine the price of your premiums. Replacement cost coverage simply pays you the same amount you paid for an item, while actual cash value factors depreciation into the item’s value.

So let’s take a look at a laptop that’s destroyed by a covered natural disaster, such as a hurricane. If you bought that laptop four years ago for $1,000 and you have replacement cost coverage, your insurer will simply write you a check for $1,000 to replace it. However, if you have actual cash value coverage, your insurer will argue that the item’s value has decreased since you purchased it and, therefore, is only worth $600.

While there’s no universal formula used by insurance companies to determine the actual cash value of an item, you’ll nearly always receive less money for any items under this coverage. But since you receive less coverage, a renters insurance policy with actual cash value coverage costs less than replacement cost coverage.

When enrolling in renters insurance, it’s important to determine the value of your items so you know how much coverage you’ll need. The best way to do this is to create a contents list, which also helps you prove what you had should you ever need to file a claim.

Your personal property coverage needs to match the value of all your items combined. If you have $30,000 worth of personal belongings, you need $30,000 worth of personal property coverage in your policy. There’s no sense in getting $100,000 in coverage. You would be overinsured, and it would cost you more money in premiums each month.

Loss of Use Coverage

If a natural disaster damages your home so much that it needs to be repaired or rebuilt, and you must temporarily move out during the process, loss of use coverage can reimburse you for additional living expenses you incur while you’re temporarily displaced.

It can help pay for a hotel or rental home of equivalent value, extra gas money you’re spending on a longer commute, pet boarding because you can’t take your furry friends to your new place and even a storage unit to house any belongings you may not be able to take with you.

Renters are able to choose how much loss of use coverage they enroll in. We recommend enrolling in at least three months’ worth of your rent just to be safe. So if you spend $1,000 per month in rent, you should probably get at least $3,000 in loss of use coverage. Keep in mind that the more coverage you get, the more expensive your premiums. 

Windstorms

Windstorms like hurricanes, tropical storms and tornadoes can be extremely devastating. Luckily, renters insurance covers your personal belongings if they’re directly damaged or destroyed by a hurricane, tropical storm or tornado. Also, if you must move out while your home is being repaired from the damage, your policy’s loss of use coverage will kick in.

Fires

Home fires are one of the most commonly filed home insurance claims each year. Luckily, your renters insurance policy provides coverage for your belongings and financial relief for you in many instances of fire damage. The only exclusions may apply to those living in a state that’s prone to wildfires or if the fire was caused by arson.

Floods

This is where your policy starts to get a bit hairy. Damage from floods isn’t covered by your renters insurance — or any home insurance policy for that matter. To get coverage, you’d have to invest in a separate flood insurance policy, which can be issued by a private carrier or through the government’s National Flood Insurance Program.

However, flood insurance for renters comes with similar coverage for both your personal belongings and additional living expenses. If you live in a flood-prone area and are located on the first through third floors, we strongly encourage you to purchase a flood insurance policy.

Earthquakes

Renters insurance doesn’t cover damage caused by earthquakes, even if you’re forced to move out of your home. Although earthquakes aren’t too common in the United States, we highly recommend purchasing earthquake insurance if you live in an area that’s prone to them.

Sinkholes

Sinkholes are most common in Florida and other areas across the country where large deposits of natural springs are located. However, similar to the ground movement caused by earthquakes, sinkholes are excluded in renters insurance policies — even in Florida.

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Averaging just $12 per month, renters insurance can protect your belongings for the cost of a few cups of coffee.

The editorial content on Clovered’s website is meant to be informational material and should not be considered legal advice.