Even when living in government-owned housing such as the barracks or family housing, your personal belongings may not be insured against damage and theft. Renter's insurance can provide you with peace of mind, knowing that your possessions are covered in the event of damage or theft.
What is renter's insurance?
Renter's insurance is a form of property insurance that provides coverage for your belongings and liability within a rental property. Renter's insurance applies to individuals renting or subletting a single family home, apartment, duplex, condo, studio, loft or townhome. The policy protects against losses to your personal property within the rented property. Additionally, renter's insurance protects you against losses resulting from liability claims, such as injuries occurring on the premises that are not due to a structural problem with the property (in this case, the government would be liable, not you.).
What type of insurance for my property does the military provide?
The insured coverage amounts of your property offered by the military depend on the facility. In some cases, the government provides minimal, limited coverage to your personnel possessions if they are damaged or stolen from your quarters. In other cases, renter's insurance is included in the monthly cost of your quarters (often as part of the monthly cost for privatized housing). In either case, the coverage amounts included may be large enough to completely replace your belongings in the event of a fire or flood. For this reason, you should first check your housing agreement to determine the amount of coverage you already have to decide how much additional coverage you need.
What options for coverage do I have?
A renter's insurance policy has two main coverage aspects: personal property coverage to insure the value of your possessions and liability coverage to protect you from lawsuits and help pay for medical claims for injuries incurred on your property.
- Personal property coverage. Personal property coverage provides insurance for the value of your personal belongings. Insurance policies can be either "named perils" or "all risks" policies. In named peril policies, the policy covers property that is stolen or damaged only by a cause specifically named in the policy (such as fire, flood, etc.). In all risks policies, the insurance pays for damages from almost any loss, except those specifically excluded. You can also choose whether your property is insured as "actual cash value" or at a "replacement cost" level. Actual cash value means the insurance company will replace your property minus a deduction for depreciation while replacement cost means the company will pay to replace your property at the price you would pay to replace it today.
- Liability coverage. Liability coverage pays for medical payments for injuries or damage to individuals or property for which you are legally responsible. This also provides coverage for accidents that occur outside of your home that are caused by you, your pet or your property. The liability coverage contained in most renter's insurance policies includes legal defense costs if you are taken to court over such an accident.
How is the price of renter's insurance determined?
The price of renter's insurance coverage will vary depending on the insurance company you choose, as well as other factors the insurance companies use to set the price. These factors may include, but are not limited to:
- Dollar amount of coverage. This is a leading factor in the price of your policy. The more coverage you purchase for your possessions, the higher the price of the policy.
- Amount of the deductible. A deductible is the amount you have to pay out-of-pocket for expenses before the insurance company will cover the remaining costs. Higher deductible amounts (meaning you would have to pay more out-of-pocket before the insurance pays) lead to lower insurance policy costs.
- Actual cash value vs. replacement cost. Actual cash value factors in the depreciation of your possessions, while replacement cost replaces your possessions with new ones, so choosing coverage with replacement cost will result in a higher cost for the policy.
- Your location and previous claims. If you live in an area prone to thefts, you may have a higher price for your insurance. Additionally, if you or the previous person or neighbors have had a large amount of claims, this may raise the cost of your policy.
- Additional coverage. If you have unusually expensive items, such as fine jewelry or an art collection, you may consider adding a "rider" to provide extra coverage. This additional coverage will likely increase the cost of your insurance policy.
As the price of renter's insurance can vary from location to location and from insurance company to insurance company, you should take the time to contact multiple companies to request a quote. Insurance company agents can walk you through the different coverage options to ensure that you receive the coverage appropriate to your living situation.
As a military service member, you will have to update your policy as you move. The cost of insurance is one factor to consider when you decide whether to rent or buy a home. The podcast Preparing to PCS offers the story of one military couple and how their research helped them to make such decisions.