There’s plenty that you should know about renters insurance. Much of it you can learn from reading your policy. You are, after all, responsible for knowing what it covers. There are a few points that can be critically important to your coverage. We’ll use a Columbia, MD Renters Insurance as an example.
Just The Facts
- Renters insurance only covers people listed on the policy, with some exceptions for relatives.
- Liability can pay for a defense against claims.
- Renters insurance is the most affordable way to protect your family.
- Policy forms are standardized in most states.
Coverage Applies Only To People Listed On Your Renters Insurance Policy
If someone isn’t listed on your policy, they’re out of luck and have no coverage. It’s that simple. There are a variety of living situations. Each has a right way to list everyone who should be covered. Failure to list them means no coverage.
The sole exception to this comes directly from the policy language. The policy defines the “named insured” as you, your resident relatives and your resident spouse. What does that mean to you?
The word “resident” is crucial to the definition of “insured” in the policy. Someone who is related to you and lives with you would have coverage automatically. The same applies to your spouse as long as you’re living together. If you’re separated, you’ll both need your own policies, though! Minor children related to you are also covered by the policy language. Read carefully to make sure they meet age and residency requirements.
Renters Insurance Liability Pays For Defense Coverage
If a claim is made or a lawsuit is filed against you, it’s going to cost quite a bit to defend against that claim or suit. You’ll need the right kind of lawyer, and those cost money. Your insurance company has a duty to defend you against claims or suits which the policy could reasonably pay for. How is this determined?
The insurance company has a few options when a claim is filed. They can generally either pay the claim, deny the claim based on specific policy language, or send a reservation of rights letter. If they intend to pay the claim or they send a reservation of rights letter, the company then has a duty to provide you with a defense. They pay the lawyer, but the lawyer represents you. The attorney’s ethical duty is also to you, not to the company. The fact that the company pays the bills does not change who their client is.
Defense coverage can end in one of three ways. The policy limits could be exhausted by payment, the company could settle the claim within the policy limits, or they could determine there is no coverage. The latter is only generally a concern when you’re under a reservation of rights letter.
Remember To List Your Landlord Correctly On Your Policy
Your landlord wants to be listed on your renters insurance policy. The reason they want to be listed is to ensure that they’ll be notified if the policy lapses or cancels. They generally aren’t looking for coverage under the policy, they just want to make sure that you stay covered.
The difference between additional interest vs. additional insured is that additional interest does not offer any coverage. It’s strictly a notification provision. Additional insured offers liability coverage and defense coverage. It’s not something that personal lines policies are intended to do. As a result, additional insured can be problematic. If your landlord is an insured on the policy and has a claim against you, there may not be coverage available on a Columbia, MD Renters Insurance.
The state of Maryland recently tried to ban landlords from requiring additional insured status. That bill failed, but there are rumors of another attempt.
Renters Insurance Is The Most Affordable Way To Protect Your Family
The average cost of renters insurance is just fifteen dollars a month nationwide. That’s less than the cost of having a pizza delivered. In other words, it will fit into any budget. The coverage provided can help your family to rebuild after a disaster. Most people don’t have the savings necessary to replace everything they own. Renters insurance returns you to the financial condition you were in before the loss happened.
Policy Forms Are Similar In Most States, But Be Careful
With the notable exception of Texas, renters insurance policy forms are similar within the same state. Those policy forms will cover a similar set of risks, but the difference lies in how the company interprets the policy form and how they pay claims. A few companies have a reputation for fighting nearly every claim to some degree. Most companies are in the business of paying claims, not fighting them.
The difference is in underwriting standards to issue the policy in the first place, how they pay claims, and the price charged for coverage. These factors will vary between companies. You want to work with an underwriter that is highly rated by AM Best. Just like people have credit ratings, insurers are rated on their financial security.
There’s much more to know about renters insurance, of course. If you still have questions, feel free to call Effective Coverage and speak with an insurance expert. Insurance is something that you need to fully understand when you purchase it. Our insurance experts can help to address your questions and help you determine if you have the coverage that you believe you have.
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