Does Renters Insurance Cover Theft?
At Hood Insurance, an insurance agency in Lynwood, Washington, a question we get asked often is does renters insurance cover theft? And the correct answer is that it depends. All policies are different, so it depends on the endorsements (coverages) added to the base policy. So let’s take a closer look at the different policies.
Answering The Question: Does Renters Insurance Cover Theft
Coverage C (Personal Property) is the section of the policy that addresses this. In this section it outlines the “Covered Causes of Loss” which tells you what you are insured against, and what the policy will exclude. Most policies that include Personal Property coverage will also include theft as one of the risks that they cover.
However, you are likely to notice phrasing like “Includes theft from a known location, when it is likely that theft has occurred” or words to that effect. In other words, if you simply can’t locate an item but can’t recall where you last saw it or exactly when it left your possession, the insurance carrier is likely to call that “mysterious disappearance” not “theft” and the loss may not be covered by your policy. Theft is a very specific term that indicates your property was taken from you by someone you did not give or loan it to. Therefore it is generally accompanied by a police report, or is part of a larger claim where someone broke into your home to steal your property, or both.
In those cases where an item was stolen, three things will determine the amount your insurance company will pay. First is your deductible, which is the amount of any given loss you have agreed to pay out of pocket. Second is the type of coverage you selected – if you chose Actual Cash Value then the insurance company will provide the depreciated value of the item(s). This is most easily estimated by looking at what you could have sold the item for at the time of theft. In other words, if a ten year old television set was stolen the depreciated value would likely be very low, and nowhere near the amount needed to purchase a new television set of comparable size. The option most people choose is Replacement Cost, which states that the insurance company will replace the stolen item(s) with a comparable, brand new version including any local sales tax. Finally, the limit you have chosen for your personal property coverage determines the maximum amount the insurance carrier will pay for any given theft of personal property.
An insurance policy wouldn’t be an insurance policy without some fine print, so be aware that certain types of personal property have coverage limits lower than your overall personal property limit. Jewelry, artwork and firearms are typically capped at a much lower limit, unless you specifically add them to (or endorse them on) the policy. Doing so does increase the cost, but it also means that you are insured for any cause of loss including “mysterious disappearance” so it is a great way to protect wedding rings and other items of real value. If endorsed on the policy, the ring is insured even for things like the stone falling out and just disappearing.
Unless endorsed on the policy, artwork is typically covered at actual cash value even if you have selected replacement cost coverage for personal property. Actual cash value gives no value to the painting itself, but only to the materials used to create it. Thus, a five million dollar Picasso would be valued at the cost of the canvas and the paint used, depreciated over the time since
the painting was created which would result in a settlement of a few cents whereas if the artwork had been endorsed on the policy it would be covered for whatever amount you chose when you added it. Generally these values have to be supported by a recent appraisal or receipt as opposed to simply making up an estimated value.
To estimate how much your insurance company might pay for a specific loss, you would total up the value of the property stolen. If you have replacement cost, you would use the amount it would cost to walk into a store and buy a brand new, comparable version of what was stolen. “Comparable” means same brand, quality, etc. although in many cases, especially with electronics, quality has advanced so much that the new version will be substantially better than what was stolen. If you do not have replacement cost, you will have to estimate how much you would have to pay for a replacement of the same age and in the same condition.
From the total amount you come up with, apply any related limits to types of property that are subject to lower limits. In other words, if an item of jewelry was stolen and the base policy only offers a maximum of $500 for jewelry and you did not endorse the item on the policy then your policy will pay no more than $500 regardless of the actual replacement cost.
Once you have factored in these lower limits where applicable you would then subtract your deductible from the remaining total. The remaining value is a rough estimate of how much your insurance company might pay. All claims are determined by the adjuster assigned to them, so there is no absolute way to determine your settlement amount until the adjuster has reviewed the situation, determined coverage limits and so, after which they will provide you with a detailed breakdown of the settlement amount.
Generally speaking, most adjusters are human beings who appreciate a friendly and reasonable approach, so you feel that there may be an error somewhere, be sure to keep this in mind when you raise your concern with your adjustor.
Because of all the potential complications, we here at the Hood Insurance Agency always recommend working with an agent who can help design your policy to be sure it covers everything correctly and can also work with you and the adjustor in the event of a claim. It is a wonderful relief to be able to relay your concern or question to your agent and then return to your daily life, leaving your agent to handle the inevitable missed calls, voicemails etc. that occur before you get a response from the adjustor.
As always, please don’t hesitate to reach out with any questions you might have. We are always happy to help!
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