For the renter, tenant's insurance can provide the necessary level of protection. Insurance is designed to bring you back to the same they were in before a loss occurred - a concept known as indemnity in the industry.
A typical tenant's policy covers the following:
- Coverage for your personal property - this is normally a selectable number that you choose yourself to cover your belongings.
- Coverage for loss of use - this reimburses you for expenses if you can't live in your apartment after a covered loss occurs - primarily for rent to live somewhere else.
- Liability exposures, protecting you from lawsuits for injuries that occur on your premises. Many companies will extend this protection to off premises, as well.
- Medical expenses if someone is injured within your on your property - note this doesn't apply to you or your resident family.
The type of policy used in tenant's insurance is known as an "HO4."
- HO4 policies generally cover against all perils, but are subject to company specific exceptions (typically flood, earthquake, sinkhole collapse, intentional acts, and wear and tear, as well as others).
Some policies will go beyond these core coverages and provide more extensive ones, such as sewer or sump backup, worker's compensation for occasional employees, lock replacement, identity fraud, and more.
Policyholders may also purchase coverage for collectible and appraisable personal property - jewelry, fine arts, furs, musical instruments, etc. Pricing for this protection and rules regarding appraisals vary by company.
As an example, to be adequately insured for something such as an engagement ring, though, jewelry should be explicitly covered on a policy. Scheduling a ring normally covers it for nearly all perils, including theft and mysterious disappearance.