Apartment Guru: Burned by Renters Insurance

Dear Apartment Guru,

Recently there was a fire in my living room. I had a house-sitter at the time and it looks like she was in the room with a candle burning. Because she was there, she was able to put the fire out using the two extinguishers my landlord had given me. However, my television and stereos were both destroyed by the fire extinguisher goo. The curtains beside the entertainment system went up first, followed by the tapestry I drape over the television stand that also holds my stereo. My sofa has a few small black burn holes in it where embers fell, and the hardwood in that corner of the room is a little bit charred. Both the electronic items and the sofa are of pretty good quality and I paid a lot for them.

Long story short, my renters insurance is only giving me money for the damaged items based on their depreciated costs. I totally thought you were supposed to get enough money to actually replace your items with new items of approximate value or something, if you were paying for renters insurance -- at least, my cousin was able to after she was robbed. So, does this sound right to you?

-Feeling Burned
Dear Burned,

First of all, I am so sorry about your home. What a horrific thing to have to deal with. It's lucky your house-sitter was able to contain the damage -- not so lucky that she caused it in the first place. Regardless, it doesn't feel good to lose so much and then wonder if you are being taken for a ride by insurance afterward.

Monica O'Day, a former insurance broker in Nashville, says, "There are several different kinds of renters insurance. You have to do a little research before committing to just any one kind."

O'Day mentions actual cash value coverage (ACV) and replacement cost coverage in particular. "It sounds like she has ACV coverage which means that the items in question are worth their value on the day of the fire," she explains. "In other words, even if she paid $500 for her stereo when it was new, today it may only be worth half that. And that is what her payout will be."

Your cousin, on the other hand, probably got replacement cost coverage, which pays out as you described, for new items of similar quality. So, she would get a new TV rather than its depreciated value.

Renters insurance is a great idea and I think even you would agree that getting something to help alleviate the costs of this crisis is better than nothing. But next time, make sure you ask about the premium costs of all the different kinds of renters insurance. Sometimes spending five more dollars per month will get you exactly what you want.

Now, if you inquire with about your policy and realize you have to make due with half or less than what your items are worth, Burned, try not to fall apart. Take a deep breath and use this as an opportunity to appreciate what you still have.

Then maybe you can see what you have to do as something of an adventure. Figure out how can you best spend this money. Look online for sales. Decide if in fact you need a television after all. Maybe see if you can buy a set of speakers and use your computer as a stereo. Put a rug over the charred places and a cover over your sofa. Then use the rest of your insurance money to take a trip, someplace that will give you greater peace then a bunch of new "stuff" ever could.

Best of luck!

Have a question for the Apartment Guru? Email her at: apartmentguruquestions@gmail.com

The Aparment Guru is Joselin Linder, co-writer of "The Good Girls Guide to Living in Sin" and "Have Sex Like You Just Met." Having rented apartments and houses in Boston, Seattle, San Francisco, Brooklyn, Columbus, OH and abroad in Prague, she knows what it means to live in a home you don't own and still make it homey. Anything she doesn't know, she isn't afraid to ask.
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