First of all, you can’t just drop personal property coverage. A liability only renters insurance policy isn’t a renters insurance policy. It’s a liability insurance policy, and it’s quite difficult to find in the context of renters insurance. There are very few policies that cover just liability.
That’s mostly because the insurance industry has evolved to offer coverage that the majority of people want. The majority of people want their property to be covered.
Besides, since renters insurance is a derivative of the standard homeowners insurance policy form, the coverage is going to be present anyway. Homeowners with insurance often have mortgages, and the mortgage company wants their collateral interest in the property to be protected.
But if we look at it as an academic question, rather than a practical one, could you be properly protected if everyone around you has liability coverage?
We would submit that you could not be properly protected. First of all, there is the obvious general non-zero risk of theft. Theft is an intentional act, so even if the person who steals your property has liability coverage, coverage would be excluded for their malicious and intentional act.
Further, there are a decidedly non-zero number of losses for which no entity or person is directly at fault. Once in a while, Colorado Springs gets a tornado. It’s far from a common occurrence, but it’s an occurrence nonetheless. If a tornado touches down in Colorado Springs renters insurance will protect your property and make sure you’re made whole afterwards.
Fires sometimes fall into an “Act of God” category as well, where no one is liable. Lightning can start them, certainly, but so can a squirrel chewing through a wire. In the latter instance, if the wiring was properly installed and inspected, and reasonable steps had been taken to control vermin, it’s unlikely that anyone would be considered to be at fault for that loss.
These Acts of God, as they’re referred to in your insurance policy, are intervening causes which are so directly responsible for the loss that, but for the intervening cause, there would not have been a loss. They are a defense against strict liability, and they generally excuse non-performance of an agreement or responsibility for the loss. Generally one is not liable for unforeseen forces of nature. That could well include both the tornado and the squirrel.
There’s another significant risk to your property, as well. The vast majority of renters insurance policies sold in Colorado will include replacement cost coverage on your personal property. That means you’ll be able to claim the amount of money you need to go buy new property.
That’s what you want, right? You want to purchase a new computer, not one that is worth the value of your old one? Of course that’s what you want. You want to be put back in the financial condition you were in before the loss, and that’s what renters insurance is for.
If you rely on the responsible party’s liability coverage, you won’t get replacement cost.
Giving broad consideration to liability statutes, generally the responsible party is only responsible for the actual cash value of the property that suffered a loss. Your neighbor doesn’t have to buy you a new computer, he only has to pay the value of your existing one. If it’s a few years old, that value is likely to be far lower than what you need to replace the computer.
That is the number one reason that people have personal property coverage on their policies, and make a claim against that coverage even when the person who caused the loss has liability coverage. The liability for actual cash value also, of course, is all that is binding on the responsible party’s insurance carrier as well, so they will only give you actual cash value.
Insurance policies are nuanced documents which can be challenging to read and interpret. That doesn’t excuse you from having at least a layman’s understanding of your policy, of course. It’s long been held that you’re responsible for knowing what’s in your policy, regardless of representations made to you about the policy. It’s crucial to understand the ways in which your policy protects you that someone else’s liability policy would not.
If you have questions about your renters insurance in Colorado Springs, you can call Effective Coverage. If you need a policy, you can get one in just sixty seconds! Just call (800)892-4308 or click to get covered - whether you need Colorado renters insurance quotes online or coverage anywhere else!
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