2. Does the building owner’s property insurance ever cover the tenant’s personal property?“Have you been down in the basement?” Nathan asked his wife, Erin, as he entered their apartment.

“No, what’s up?” responded Erin.

“It’s flooded because of all that rain we got last weekend!” he exclaimed.

“Oh no! We have the extra furniture my mom gave us stored down there. Is everything ruined?” Erin asked.

“The couch and coffee table are in a foot of water; the love seat was the only thing that looked OK. Boy, I didn’t realize the basement of this building wasn’t waterproof. I’m going to call our landlady to complain.”

As Erin thought about the situation, she remembered that when they moved in last fall, Kathy, their landlady, had informed them that her insurance policy covered the building but not the property belonging to each tenant. Because of this, they had purchased renter’s insurance. “Nathan, I think our renter’s insurance will cover the damage. Let me give our agent a call.”

When Erin and Nathan purchased their insurance, they had to decide whether they wanted to be insured for cash value or for replacement costs. Replacement was more expensive, but it meant they would collect enough to go out and buy new household items at today’s prices. If they had opted for cash value, the couch for which Erin’s mother had paid $1,000 five years ago would be worth less than

$500 today.

Erin made the call and found out their insurance did cover the furniture in the basement and at replacement value after they paid the deductible. The $300 they had invested in renter’s insurance last year was well worth it!

Not every renter has as much foresight as Erin and Nathan. About 4 in 10 renters have renter’s insurance. Some aren’t even aware they need it. They may assume they are covered by the landlord’s insurance, but they aren’t. This mistake can be costly.

Think about how much you have invested in your possessions and how much it would cost to replace them. Start with your stereo equipment or the flat screen television and DVD player that you bought last year. Experts suggest that people who rent start thinking about these things as soon as they move into their first apartment. Your policy should cover your personal belongings and provide funds for living expenses if you are dispossessed by a fire or other disaster.