Most tenants are familiar with what renters insurance covers, but what about the things excluded from coverage?
Wrongfully assuming a specific peril is covered by a renters insurance policy could be devastating to the policyholder and whoever else who else might depend on that coverage.
Thankfully, there are a number of things explicitly excluded from almost all renters insurance policies and can be covered by endorsements or an independent policy. Choosing to add an additional policy probably won’t break the bank, either. The average annual renters insurance premium in the U.S. costs $187.
Floods Are Not Covered By Renters Insurance
Flooding is not covered by most renters insurance policies but tenants need to be aware of the peril. It affects many people in the U.S. every year, not just those who live near rivers, lakes or the coastline. In fact, within the last five years, all 50 states have experienced flooding from a variety of causes including, tropical storm surges, heavy rains, snowmelts and alterations in geography that change the path of runoffs.
Though flash floods – fast-moving water 15 feet or higher – are thought to be the most destructive and deadly, a few inches of water can also be devastating. Water soaking furniture and electronics owned by a tenant would probably mean a substantial loss.
Remember, tenants are not responsible for their rental unit (the home or unit is the responsibility of the owner). But depending on the home they are renting, or floor they live on, renters might want to consider purchasing a separate flood insurance policy to go along with their renters insurance.
The only exception to the above might be USAA. The insurer that services members of the U.S. military and their families includes flood coverage in their renters insurance policies.
Earthquakes Are Not Covered
Like floods, earthquakes are not covered by renters insurance but are a peril that should be taken into consideration. Renters who live on the west coast of the U.S., in Missouri and Oklahoma should especially give some thought to purchasing earthquake insurance to protect against this peril.
Although harmful earthquakes are less likely than flooding, they can be equally or more devastating to both rental units and the property inside.
Unlike almost all other companies, USAA also include earthquake coverage in their renters insurance policies.
Sinkholes Hit A Gap In Renters Insurance Coverage
Sinkholes are very uncommon, with the exception of certain areas in the southwest U.S., especially Florida. Still, renters should think about purchasing an endorsement or getting a separate policy to cover sinkholes – they are not covered by renters insurance.
Renters insurance sometimes covers “catastrophic ground cover collapse,” but the event usually needs to meet a stringent list of criteria to qualify for coverage. If a policyholder has reason to worry their belongings might be lost, along with a rental property, to a sinkhole they should not rely on the coverage included.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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