Renters' Insurance Overview
Renters' insurance covers you against financial loss if your personal property (contents) is damaged or destroyed from a covered peril. A peril is something that may cause damage to or destruction of your property such as a fire, hurricane or theft. A list of normally covered perils is included under the “coverage” section below. In some cases, flood coverage may be added by endorsement to your renter’s policy. If your insurer does not provide flood coverage for your personal property, a separate policy can be purchased. If you are interested in coverage for flood, you should consult your agent.
Although we have discussed some of the coverages available in this overview, insurance contracts vary between insurance companies so you should always review the coverage provided in your own policy to determine whether you have the coverage you need. It is too late to obtain additional coverage after a loss has occurred.
Select the desired option below.
Personal Property/Coverage C: Your personal property is generally covered anywhere in the world. If your property is located in another residence owned by you, but not insured, the policy may limit the amount of coverage provided to 10% of the total coverage. Most policies also include limited coverage for improvements or betterments made to the residence by an insured.
There are special limits on certain items such as jewelry, guns, furs, money, cameras, art or antiques, etc. You should review this list found in your policy and speak to your agent about additional coverage if needed.
Coverage is typically issued to cover "named perils" which may include fire or lightning, windstorm or hail, explosion, riot or civil commotion, aircraft, vehicles, smoke, vandalism or malicious mischief, theft, volcanic eruption, falling objects, weight of ice, snow or sleet, accidental discharge or overflow of water or steam, tearing, cracking, burning or bulging, freezing, sudden and accidental damage from artificially generated electrical current, and Catastrophic Ground Cover Collapse. (Sinkhole coverage "may" be purchased by paying an additional premium.)
Coverage can be obtained that settles claims based on the "actual cash value" of the personal property at the time of loss or that settles claims on a "replacement cost" basis. This is something you should discuss with your agent.
Actual Cash Value means the cost to replace an item less depreciation. In other words, if damage occurred to a television that had a 10-year life expectancy and you owned the television for 5 years, notwithstanding any deductible, the settlement would be 50% of the cost to replace the television because you had already used 50% of the life expectancy. Your loss consisted of the remaining 50%.
Replacement Cost pays for the cost of replacing the damaged or destroyed item. In the example above, with replacement cost coverage, you could replace the damaged television with a new one without a deduction for depreciation if the new one is of the same kind and quality of the damaged one. If you have replacement cost coverage but elect not to replace a damaged or destroyed item, the insurer will likely only pay the actual cash value for the item.
Loss of Use/ Coverage D: Loss of Use provides coverage for additional living expenses and/or fair rental value.
"Additional Living Expense" covers the excess expenses of an insured who must live elsewhere due to a loss to their residence. In many instances, coverage is also provided if a civil authority prohibits you from using the "residence premises" as a result of direct damage to neighboring premises by a covered peril. Additional Living Expense pays only reasonable "excess" expenses until the property is habitable.
As an example, if your family normally spends $200.00 a week for groceries. As a result of the damage to your kitchen, you can no longer cook so all your meals are eaten out. The cost of eating out for your family averaged $400.00 a week. The insurer would pay the difference between the amount you normally spend for groceries and the amount it cost to eat out, which is $200.00.
The additional living expense must normally be incurred prior to reimbursement. Obtaining reimbursement for additional living expenses is always contingent on providing the insurer with receipts. Be sure to save all receipts, regardless of the amount.
Payment will be for the shortest time required to repair or replace the damage or, if you permanently relocate, the shortest time required for your household to settle elsewhere.
"Fair Rental Value" provides coverage if you are a landlord, and the residential property becomes temporarily inhabitable by your tenants due to a covered loss. This coverage would help replace the loss of rents. Please note, the insurer will not reimburse expenses that do not continue while it is not fit to live in.
The payment will be for the shortest time required to repair or replace the residence premises.
Liability/Coverage E: Coverage E covers an insured for amounts they become legally liable to pay due to bodily injury or property damage of others, including the cost of defense. This would not include any property damage or bodily injury to you or any of the other insureds on the policy. This coverage would only be applicable if the property damage or the bodily injury is not intended or expected.
Medical Payments to Others/Coverage F: Coverage F covers medical and other related expenses for members of the public injured through personal activities of an insured, without regard to the insured's legal liability. For example, if a guest slips on your property, this coverage will help pay for the minor medical expenses sustained for the injuries.
Rental insurance rates are developed using several factors:
The location of the property: The city, county, zip code can be used to establish the territory.
The amount of coverage selected.
The fire protection class: The rating of the fire department in that territory. The ratings range from 1-10 established by the Insurance Services Office. A rating of Class 1 represents exemplary fire protection, and Class 10 indicates that the area's fire-suppression program does not meet minimum criteria.
The construction of the dwelling such as wood frame, concrete block, brick, etc. Companies charge different premiums based on the fire resistance of the construction material.
Some insurance companies charge a higher premium according to the age of the home.
Some insurance companies charge a higher premium if you did not consistently maintain prior insurance coverage.
After the base rate is determined, other rating factors are applied to determine individual surcharges and credits. Also, assessments currently due are added to the base rate to determine the final rate. These assessment and surcharges could be levied by entities other than the insurer. In Florida for instance, there may be assessments charged to the residential policyholders by the Florida Insurance Guaranty Association.
Underwriting guidelines vary between insurance companies. However, below are some of the common features an insurer reviews when determining whether to insure a new applicant or how much to charge. They may use these same underwriting criteria to determine whether to offer a renewal policy.
An insurer may consider the age of the home, roof, plumbing, electrical wiring and the heating and air conditioning systems. Even though a renter's policy does not provide coverage for the structure itself, with the exception of improvements or betterments made by an insured, these factors can contribute to personal property losses.
They consider the condition and location of the residence and who occupies it.
They may refuse to insure an individual who owns certain animals. Most insurers believe the presence of certain animals on the premises increases liability risk.
The credit and loss history of the applicant is also considered. If the insurer makes an underwriting decision based on adverse information contained in a credit report, they must furnish the insured with a copy of the report or provide the name, address, and telephone number of the reporting agency.
If an insurer refuses to insure an applicant or if it decides to non-renew or cancel an existing renter's policy, it must provide advance notice to the insured and provide the specific reason for their decision. This is discussed further in the cancellation - nonrenewal information section.
Cancellation means the termination of an insurance policy before its normal expiration date (in other words, mid-term).
Insurers must provide a specific reason for cancellation in their notice to the insured. Depending on the situation, the following advance notices must be provided to the insured:
A 10-day advance notice if the premium is not paid;
During the first 60 days of the policy period, insurers must provide a 20-day advance notice with certain exceptions, except for nonpayment of premium;
After the first 60 days of the policy period, the insurer must provide a 120-day advance notice, but the policy can only be cancelled for misrepresentation, non-payment of premium, failure to comply with underwriting requirements, a substantial change in the risk, or if all policies in a certain class of insureds are being cancelled.
Exception: There is one exception to the notice requirements listed above. Insurers may cancel policies with a 45-days advance notice if the Office of Insurance Regulation (OIR) determines that the early cancellation of the policies is necessary to protect the best interests of the public or policyholders. The OIR must also approve an insurer's plan for early cancellation or nonrenewal.
The following limitations are placed on cancellations of renter's policies:
Act of God Claims: Only under certain circumstances is it permissible for claims that are the result of an "Act of God," to be cited as the reason for cancellation. The insurer must demonstrate, by claims frequency or otherwise, that the insured has failed to take action reasonably necessary, as requested by the insurer, to prevent recurrence of damage to the insured property. However, the insurer may raise a deductible at renewal.
Daycare on Premises: With exceptions, Florida law prohibits an insurer from canceling a residential insurance policy solely based on the operation of a daycare business at the residence. The insurer can cancel a policy if one or more of the following conditions exist:
The insured does not carry a separate commercial liability policy or endorsement which provides liability coverage for the family daycare home operations.
The insured fails to comply with the family daycare home licensure and registration requirements.
The insurer discovers any willful or grossly negligent acts or omissions, or any violations of state laws or regulations establishing safety standards for family daycare homes by the insured, or by their representatives which materially increase any of the risks insured.
The insured cares for more children than allowed by law.
During a Hurricane: If a cancellation is scheduled to take place during a hurricane, the insurer is required to extend coverage until the end of the duration of the hurricane. However, the insurer may charge the "current" premium rate (the rate then in effect) for the extended coverage.
Pending/Open Claim or Existing Damage: When there is a declaration of an emergency by the Governor and the filing of an order by the Commissioner of Insurance Regulation, an authorized insurer cannot cancel your policy if you have damage from the hurricane or windstorm. The coverage must be granted until 90 days after the repairs have been made.
However, the policy can be cancelled or nonrenewed prior to the repairs are completed for nonpayment of premium, in which case a 10-day notice must be given. The policy may also be cancelled upon a 45-day notice if there is a material misstatement or fraud related to the claim, or if the insurer determines an insured has unreasonably caused a delay in the repair, or if the insurer has paid the policy limits.
Premium Refund Timeframe: When a renter's policy is cancelled by the insurer or the insured, any unearned premium must be returned to the insured within 15 working days after the effective date of the cancellation. If the premium is financed with a Premium Finance Company.
Water Damage Claim: A single claim which is the result of water damage may not be used as the sole reason for cancellation unless the insurer can demonstrate that the insured failed to take action reasonably requested by the insurer to prevent a future similar occurrence of damage to the insured property.
A nonrenewal is the termination of an insurance policy at its normal expiration date.
An insurer must provide an advance notice of 120 days to the first named insured if it decides not to continue a policy past its original expiration date. It must also provide the specific reason for the nonrenewal. In other words, if an insurer decides the risk no longer meets their underwriting guidelines due to the age of the residence, it must provide this reason in the notice.
The following limitations are placed on nonrenewals:
Act of God Claims: Only under certain circumstances is it permissible for claims that are the result of an "Act of God," to be cited as the reason for nonrenewal. The insurer must demonstrate, by claims frequency or otherwise, that the insured has failed to take action reasonably necessary, as requested by the insurer, to prevent recurrence of damage to the insured property. However, the insurer may increase the deductible at renewal due to act of God claims.
Credit Report/Score: Insurers cannot non-renew a renter's policy solely based on information from a credit report, for having no credit history, or for having an adverse credit history due to medical bills. Also, if the insurer refuses to insure or nonrenews a policy due to adverse information contained on a credit report, they must furnish the insured with a copy of the report or provide the name, address, and telephone number of the reporting agency. Additionally, they must provide specific reasons for their adverse decision.
Daycare on Premises: With exceptions, Florida law prohibits an insurer from nonrenewing a residential insurance policy solely based on operating a daycare business at the residence. An insurer may nonrenewal if one or more of the following conditions exists:
The insured cares for more children than allowed by law.
The insured does not carry a separate commercial liability policy or endorsement which provides liability coverage for the daycare home operations.
The insured fails to comply with the daycare licensure and registration requirements; or
The insurer discovers any willful or grossly negligent acts or omissions, or any violations of state laws or regulations establishing safety standards for daycare homes by the insured, or by his/her representatives which materially increase any of the risks insured.
During a Hurricane: If a nonrenewal is scheduled to take place during a hurricane, the insurer is required to extend coverage until the end of the duration of the hurricane. However, the insurer may charge the "current" premium rate (the rate then in effect) for the extended coverage.
Pending/Open Claim or Existing Damage: When there is a declaration of an emergency by the Governor and the filing of an order by the insurance commissioner, the insurer cannot cancel your policy if you have damage from the hurricane or windstorm. The coverage must be granted until 90 days after the repairs have been made.
However, the policy can be cancelled or nonrenewed prior to the completion of the repairs for nonpayment of premium, in which case a 10-day notice must be given. The policy may be cancelled upon a 45-day notice if there is a material misstatement or fraud related to the claim, or if the insurer determines an insured has unreasonably caused a delay in the repair, or if the insurer has paid the policy limits.
Single Water Damage Claim: A single claim which is the result of water damage may not be used as the sole reason for non-renewal unless the insurer can demonstrate that the insured failed to take action reasonably requested by the insurer to prevent a future similar occurrence of damage to the insured property.
S. 627.43141, F.S., provides that a homeowner's (including renters) policy renewal may contain a change in policy terms. If a renewal contains such a change, the insurer must give the named insured written notice of the change which may be included with the renewal premium notice required by s. 627.4133, F.S. or sent separately within the same timeframe. The insurer must also provide a sample copy of the notice to the named insured's insurance agent before or at the same time the notice is provided to the named insured. The notice must be titled "Notice of Change in Policy Terms."
A renewal policy, which includes the addition of optional coverage that increases the premium to a policyholder, may not use the "Notice of Change in Policy Terms" to add the optional coverage to the policy unless the policyholder affirmatively indicates to the insurer or agent that they approve the addition of the optional coverage. Optional coverage is defined as the addition of new insurance coverage that has not previously been requested or approved by the policyholder.
Although not required, proof of mailing or registered mailing through the US Postal Service of the "Notice of Change in Policy Terms" to the named insured at the address shown in the policy is sufficient proof of notice.
Receipt of the premium payment for the renewal policy by the insurer is deemed to be acceptance of the new policy terms by the named insured.
If an insurer fails to provide the required notice, the original terms remain in effect until the next renewal and the proper service of the notice is given, or until the effective date of replacement coverage obtained by the named insured, whichever occurs first.
Please note: "Change in Policy Terms" means the modification, addition, or deletion of any term, coverage, duty, or condition from the previous policy. The correction of typographical or scrivener's errors or the application of mandated legislative changes is not a change in policy terms.
The intent of this law is to allow an insurer to make a change in policy terms without nonrenewing the policyholders they wish to continue insuring. In addition, it alleviates concern and confusion to the policyholder caused by the required policy nonrenewal if the insurer intends to renew the insurance policy, but the new policy contains a change in policy terms.
Proof of Ownership: A common claim concern involving a renter's policy is proving ownership and how much was paid for damaged or destroyed personal property. It is important to keep receipts of large items. It is also important to take photos or videos of the personal property in your residence. Remember, it is the responsibility of the insured to provide proof of ownership. Keep an inventory, including serial numbers when available. You should also maintain copies of inventories and other documents in a location away from the residence premises. Make duplicate copies and upload them to a hard drive stored at another location.
Insured's duties after a loss: When a loss occurs, the insured should promptly notify their agent or insurer, and review the Conditions and Duties after a Loss section of their policy. Some policy conditions may apply to all the coverage parts while others may apply separately to individual coverage parts. For example, there are separate conditions for Section 1 (Property Coverage) and Section 2 (Liability Coverage) of the contract. If more than one insurance policy covers an occurrence, all insurers should be notified.
The insured has a responsibility to mitigate damages to their property and protect the property from further damage. The insured should make reasonable temporary repairs and keep accurate records and receipts of those repairs. It is always a good idea to take photos of the damage prior to making temporary repairs, if possible.
The insured should also compile an inventory of all damaged personal property. The inventory should include the date of purchase, quantity, description, value, and the amount paid for each item. The insured may be asked to produce receipts, bills, and any other related documents to justify the amounts provided.
The insured must cooperate with the company in the investigation of the claim. The insured and/or other parties may be asked to provide a recorded statement or an examination under oath.
If the occurrence is related to a liability issue, the insured should forward all notices, demands, summons, and other process documents relating to the "occurrence" to the insurer immediately upon receipt.
Insurer’s duty to acknowledge claim communications: Within 14 days after the claim notification, an authorized insurer must send you a Homeowner Claim Bill of Rights (HCBR). This provides important information such as your right to receive a copy of detailed estimate of the amount of loss and receive either a full payment, partial payment of the undisputed portion of the claim or denial of the claim within 60 days. It also provides information about the Mediation program offered by the state of Florida.
Within 7 calendar days you should expect the insurer to acknowledge receipt of your claim, unless payment is made within that time period or unless the failure to acknowledge is caused by factors beyond the company's control.* Most likely the insurer will inform you of your claim number at this point and possibly assign an adjuster to begin the process of claim investigation, including inspection of the damaged property.
Notice of Windstorm or Hurricane Claim: The time period an initial, supplemental or reopened claim can be presented to an insurer under a renter's insurance policy providing coverage for windstorm or hurricane is limited. Under current Florida law, these claims are barred unless notice was given to the insurer in accordance with the terms of the policy and within 1 year (for initial claims) or 18 months (for supplemental claims) after the hurricane first made landfall or the windstorm caused the covered damage.
The time limits of this subsection are tolled during any term of deployment to a combat zone or combat support posting which affects the ability of the insured who is a service member.
Timeframe for Payment of Claim: Within 60 days after the insurer receives notice of a new, reopened or supplemental renter's insurance claim, the insurer must pay or deny the claim. If the settlement amount is contested, the company should pay all uncontested amounts within the 60-day timeframe unless the failure to pay the claim or the uncontested amount is caused by factors beyond the control of the insurer.* Any payment (portion or entire claim) paid more than 60 days after the insurer receives the notice of the claim, or paid after the expiration of any additional timeframe for making payment provided by the OIR when it finds factors beyond the control of the company, whichever is later, will bear interest according to s. 55.03, F.S.
*Please note: "Beyond the control" means 1) any state of emergency declared by the Governor, a breach of security that must be reported under s. 501.171, F.S., or an information technology issue that serves as the basis for the OIR issuing an order that such event renders all or specified property insurers from reasonably being able to meet the requirements in s. 627.70131, F.S., and 2) any actions by the policyholder or his/her representative which constitutes fraud, lack of cooperation, or intentional misrepresentation regarding the claim which reasonably prevents the insurer from complying with these requirements.
Verify before you buy! Contact us to verify the license of the agent and the insurance company before you sign an application for a policy.
Renters' Insurance Toolkit! This toolkit provides information to assist you with insuring your personal property. It also contains tools to assist you if you have a covered loss.
Review your coverage amount on a regular basis! You may purchase additional items during the year or make improvements or betterments to the residence without realizing the need to increase the amount of coverage you have. Make it a general practice to review your amount of coverage at each renewal to make sure limits are sufficient.
Read your policy carefully! Insurance policies differ between insurance companies so you must review your own contract. Insurance policies do not cover everything, read the exclusions. Also, there are limitations on certain types of personal property, such as antiques, firearms, jewelry, furs and electronics, including computers and their equipment. In most instances, additional coverage may be purchased for these items. Consult your agent about additional coverage.
Keep a copy of your important documents in another location! In the event your home is destroyed, you would have copies of all your important documents including receipts you may need to settle a claim with your insurance company.