Lapse

Glossary

Times are tough, and you might be looking at your bills each month, trying to decide which costs could be avoided. While being a frugal as possible is smart, make sure you are smart in how you go about cutting your monthly costs.

One item that should not be cut is renter’s insurance. Allowing your renter’s insurance to lapse can be a risky and expensive gamble.

When an insurance policy lapses, the policy holder has essentially forfeited the policy by failing to pay the insurance premiums. Once the policy lapses, the coverage by that policy is no longer in effect.

What Renter’s Insurance Covers

You might figure that you can let this insurance protection slide because you merely rent your place versus owning it. What is there to really protect, you might ask yourself. The answer is a lot.

Many people who rent make the unfortunate assumption that their landlords’ insurance policies will provide tenants coverage, which is simply not the case. A landlord’s insurance policy will cover only structural damage to the building itself – it does not protect the tenants’ possessions.

In addition, some landlord insurance policies do not cover structural damage directly caused by a tenant. For example, a tenant might leave the water running in his or her apartment, causing the water to leak through the floor, damaging not only the neighbor’s ceiling but also the neighbor’s furniture. In such a case, the tenant who left the water running would most likely be liable for the damage to ceiling and the neighbor’s possessions.

Renter’s insurance provides a wide range of coverage for policy holders. It covers damages and/or losses resulting from theft, vandalism, malicious mischief, fire, smoke and water. Renter’s insurance also can provide funds to assist a tenant who might need a temporary place to stay while damages to his or her apartment are fixed.

Furthermore, renter’s insurance works similarly to homeowner’s insurance by providing protection against legal action for personal injury or property that is damaged by you, your family or even your pets. Finally, renter’s insurance extends beyond on-premise theft and hazards, covering items like the CDs kept in a car that is stolen. As you can see, renter’s insurance provides a great deal of protection that you really do not want to go without.

What if You Cannot Afford Your Premium

If you want to keep your renter’s insurance policy but would like to pay a lower premium each month, there are several ways in which you can secure discounts for your policy:

• Seniors often are eligible for special renter’s insurance discounts.
• Raising your deductible can lower your monthly premium.
• Combining your car insurance and renter’s insurance with one insurer can result in a lower premium.
• Insurance companies often offer discounts to policy holders who install an alarm system that directly notifies the fire department or police.
• Installing items such as dead bolt locks and smoke alarms can result in discounts.
• Some insurers offer special discounts to members of certain organizations, such as credit unions or college clubs.
• Having your monthly premium automatically deducted from your bank account or credit card often can lower your premium.
• If you live in a high-risk area, many states offer renter’s insurance with premiums lower than that charged by insurance companies.
• And the most important step to paying the lowest monthly premium: shop around – the more quotes you obtain, the more likely you will find the policy that is right for you and your wallet.