Renters insurance can benefit Aberdeen-area tenants

June 25--A spring fire in Aberdeen left several tenants without apartments in which to live and without some of their belongings.

For some of those tenants, renters insurance might have helped recover losses from the blaze. Two local insurance agents -- Brian L. Jorgensen of American Family Insurance and Mary Larson of Farmers Union Insurance -- answered questions posed by the American News about the benefits of renters insurance. Here's what they had to say.

Q: What types of renters insurance are there?

Jorgensen: When it comes to renters insurance, there's just one type: It covers your personal property and offers liability protection. The coverage amounts can be customized to fit whatever the client needs. American Family's minimum is $16,000, and that's for personal property.

Larson: The policy itself is relatively simple -- it's similar to a homeowner's policy, except you're not covering the structure, rather the personal property that you own. Replacement cost is the general approach used by insurance companies because it replaces an item "like kind" without depreciation. The usual deductible for renters insurance is $1,000, although some policies are lower.

Q: What can tenants expect to spend when it comes to coverage?

Jorgensen: Each policy is different; it can start out as low as $5 a month. Many rating factors go into determining the monthly cost of renters insurance, ranging from a person's age to the community and type of structure they live in. Another factor that can affect coverages costs is the ownership of certain types of dogs and any behavior they might engage in, such as biting people.

Larson: People can expect to spend anywhere from $125 to $150 per year for a $20,000 policy for replacement of personal property. The monthly cost includes liability coverage, too, and that coverage ranges from $300,000 to $500,000 through Farmers Union.

Q: Let's say finances are tight for some tenants. What kind of renters coverage would you recommend for folks in those situations?

Jorgensen: I would recommend the minimum coverage of $16,000, which would cover the personal belongings of a tenant and also provide $100,000 in liability protection for the tenant.

Larson: If you want replacement cost coverage through Farmers Union, the minimum is $20,000 on personal property. A person can choose less than $20,000 in personal property replacement coverage, but he or she will still have the minimum of $125 a year. Anything less than $20,000 in property coverage means the coverage is no longer "replacement cost" in nature. It becomes an actual cash value policy, which replaces the actual cash value of the property in question, less depreciation and the deductible.

Q: Are there any state or federal mandates that renters insurance be carried? Can landlords and/or property management firms mandate that tenants have renters insurance?

Jorgensen: No to the first part of the question. Yes to the second part of the question, although you don't see that too often around Aberdeen. It is, however, more common in larger cities.

Larson: No to the first part of the question. Yes, to the second part of the question. There are some places in Aberdeen where property management companies and landlords require coverage.

"I think it's becoming more and more common where landlords requires tenants to carry renters insurance," Larson said.

Q: As an insurance agent, have you ever had any experience with the consequences faced by tenants who didn't have renters insurance, then suffered a loss?

Larson: "I've had people come into the office to buy renters insurance because they knew someone who had suffered a loss and didn't have insurance. The frequency isn't all that great; it's hit and miss in nature."

Q. What are the most common causes in Aberdeen, Brown County and/or South Dakota for claims on renters insurance policies?

Jorgensen: Water claims, if a pipe breaks in a house. Those claims tend to come from renters who are in older properties. Theft is also a common one, along with fires. Property is covered no matter where it's at. It doesn't just have to be in the residence. Examples include a laptop computer being stolen from a vehicle, a backpack and its contents being stolen from a classroom. Water claims, theft and fire -- all three are common in frequency.

Larson: The most common claims I have seen on renters insurance policies center on fire and lightning.

According to local insurance agents Brian L. Jorgensen and Mary Larson, the following causes are what they see the most when it comes to renters insurance claims:

-- Water

-- Theft

-- Fire

-- Lightning

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