What isn’t covered by renters insurance?
But standard renters insurance policies do not cover everything. To keep premium prices low, most policies exclude certain “perils”—in insurance speak, that means “causes of loss.” If you want coverage for losses from these and other perils, ask if you can add coverage to your standard policy. Of course, adding coverage means adding a bit to the price of your premium. But the added cost will be far less than the average financial loss from these common perils.
So what are some of these “perils?”
Floods and earthquakes
If a bathtub overflows in the apartment above you and water drips through the ceiling, that is not considered a “flood.” If a pipe breaks in your condo and water pours onto your carpeting, that is not considered a “flood.”
Water damage from these events is usually covered by renters (or condo/co-op) insurance. In insurance terms, a “flood” occurs when two or more properties or acres of land that are usually dry and mud-free are suddenly neither. If you live near a creek, stream, river, lake or ocean, you could be at high risk for flooding.
But almost any area that gets a lot of rain in a short period of time can flood if public drains are clogged or overwhelmed. If you’re concerned about flood risk, your best bet is to visit FEMA’s website to learn more about the National Flood Insurance Program. You can check if you’re in a designated flood zone and learn about where to purchase flood insurance. Back on dry land, some states, like Alaska, California, Hawaii and Nevada, have a lot of earthquakes. Most others, like Florida, Maryland and Vermont, have few or none.
Renters who live in high-risk areas may add earthquake coverage to their standard policies or buy a separate policy. Earthquake coverage helps you to repair and replace appliances, electronics, furniture and other property damaged in a quake. It also pays fees for hiring contractors to clean broken glass and other debris from your rental. If you have to move out during repairs, earthquake insurance pays for your hotel stay or costs to move to a new rental.
Why do insurance companies exclude floods and earthquakes? It all comes back to the way that insurance “works” (reminder: lots of people pooling their risks together, putting in relatively small amounts of money, in order to make big payouts to the unlucky few when something unfortunate happens). In order for insurance to function properly, the risks need to be relatively “uncorrelated” or independent of each other. A pipe explodes at your apartment building? That doesn’t make a pipe explosion any more likely at your best friend’s down the block.
But a widespread, catastrophic event like a flood or an earthquake typically affects whole neighborhoods or cities at a time, and the losses can be so great that they’d effectively “wipe out” the entire pool. In these special cases, the job of insuring such losses typically falls with an organization even bigger than the insurance companies—the government—as with the National Flood Insurance Program run by FEMA. Or with special insurers specially tasked with covering this type of risk.
Things happen. Dogs get out. They jump on little kids. They chase bicyclists onto the ground. They knock over the elderly. They fight with other dogs and bite the people who try to break it up.
The medical bills—emergency room visits, hospital stays, surgery, rehab—are not cheap. The average insurance claim for a dog-related bite or injury is about $32,000. Every dog is an individual. However, based on claims data from hundreds of thousands of dog-related injuries, insurance companies consider certain breeds to be much higher risk than others. These high-risk breeds are:
- Pit Bulls
- Staffordshire Bull Terriers
- German Shepherds
- Doberman Pinschers
- Great Danes
- Alaskan Malamutes
- Siberian Huskies
- Chow Chows
- Presa Canarios
- Cane Corsos
- Wolf hybrids
If you own a dog from one of this “dangerous” or high-risk breeds, your renters insurance may not cover your costs if your dog harms someone. Be prepared—check your policy for the breed exclusions, if any, on your policy. Of course, these exclusions only apply to losses stemming from Grover the Great Dane himself (like a dogbite). If a fire ravages your apartment, you’re still covered for your bed and Grover’s doghouse.
You may not consider your roommates a “peril.” But their property is excluded from your renters insurance. So if a fire or broken pipe ruins everyone’s furniture and clothes, you can file a claim for only the items you own. Easy remedy? Tell your roommates to get their own policy! Significant others are a different story. If you have a significant other and you live together, you very likely own joint property. So you should add them to your policy as a “named insured” to ensure they’re fully protected, too.