One tornado. One candle carelessly left burning. One bolt of lightning. One burst water pipe. One thief, bent on getting a television and jewelry from someone before the night is over. One moment, and life can change forever.

And one decision made beforehand can make all the difference in the world.

The decision would be to purchase renter's insurance. But that’s a decision too many people fail to make.
According to insurance industry statistics, only 29 percent of renters in the United States have insurance, compared to 95 percent of homeowners.

How much of a risk is this?

Estimates from the Mississippi Insurance Department’s Fire Services Development Division reveal that as many as one-half to one-third of the 10,772 residential fires that occurred in Mississippi in 1995 (the most recent figures available) happened on residential rental properties. Add to that the growth cities such as Oxford, Tupelo, Starkville, Southaven, Jackson, Gulfport and Biloxi have seen in the way of rental properties, and a serious situation arises.

In just the last few years, North Mississippi rental property residents have seen their share of losses.
On November 10, 2002, a severe thunderstorm ripped through Oxford, leaving a trail of damage across the city. A possible tornado was blamed for knocking over trees, breaking tree limbs and destroying business signs in the city. Five Ole Miss juniors -- Joshua Pittman, Chris Lomax, Tom Caughlan, Chuck Goldberg and Michael Johnson -- lost belongings in a house fire that was sparked by the storm.

Also in 2002, fire destroyed an apartment building in Tupelo. Several residents of One D'Ville Place lost belongings in the blaze touched off by a maintenance accident.

Of course fires aren't the only calamities that can befall renters. Probably more common are situations involving theft and flooding. Ruptured water pipes can rapidly cause extensive damage.

So why, in the face of all this evidence, do so few people carry renter's insurance? The prevailing reason appears to be most renters have never heard of renter's insurance, or worse, don't believe they need it.

"Some people just don't think about it, or just don't realize there is a need for (having renter's insurance)," said Talmadge Smith, an agent of Guideone Insurance in Tupelo. "Or, they think, 'I don't have that much stuff anyway, so why worry about it?' When they get to looking at clothing and shoes and anything personalized, like pictures or decorations, all that goes under contents coverage. And most of them assume they don't have a lot to cover."

Equally as bad, though, is that some renters may believe their possessions are covered under the terms of their rental agreements or leases. The reality is leases rarely, if ever, include such provisions.

"I encourage all of my tenants to carry renter's insurance," said Linda Beck of Cooper Realty in Tupelo. "Too many people think that if something happens, we (the property management company or owner) are responsible to pay for their stuff. And it clearly says in our leases that we are not."

While property owners and landlords aren't required to insure the belongings of their tenants, there are some things they are by law supposed to do. In Mississippi, landlords are required to provide a working smoke detector in each living unit of a residential rental property containing two or more apartments. Also, each apartment has to have fire extinguishers accessible by tenants and the public on the exterior of the building, spaced every 75 feet. Local town and city ordinances may call for additional and/or more strict fire safety regulations.

But as long as renters don't carry insurance policies on their own items, there is nothing that can be done when a loss occurs other than count one's losses and replace things as best as they can.

And, too often, even an apartment community's reputation for being safe isn't enough to prevent a loss.

An Ole Miss student's loss

Ole Miss alum Michael Flowers knows firsthand how even the safest of apartment communities isn't immune to problems.

"My apartment was burglarlized not during a holiday weekend, but due to the fact Ole Miss is a suitcase school," Flowers said. "It was a weekend when many students were out of town -- a weekend in the fall when a football game was not taking place on campus. I was in town, but stayed overnight somewhere else. I came home on Saturday and found my door pushed open."

The burglar or burglars got away with a television, DVD player and DVDs, VCR and VHS tapes, stereo unit, cuff links, pocket knives, valet sets and watches. They also stole his roommate's laptop computer.

"The burglars were clean," Flowers said. "They were very meticulous. My sheets and pillow cases were used to take the lute out of the house and into the getaway car."

Unfortunately, Flowers didn't have a renter's insurance policy to cover the losses.

"I did not have it," he said. "I was on a short-term lease and did not think the area where I lived was in danger. Wrong was I!"

Flowers said the hardest thing about his apartment being burglarized was, "I did not know what was gone. I mean, after they had combed the place I knew of certain things missing right away, but weeks later when I would go to find something . . . I would find it missing. Renter's insurance would have forced me to make a list of my belongings, thus if I were robbed I would know what was missing."

Police were not able to recover any of Flowers' or his roommate's things. In fact, the burglary happened at a time when the Oxford Police Department was not able to offer adequate protection for the city due to staffing and budgeting woes.

"They said, 'I figured we'd have some burglaries this weekend. I can't believe you are one of the only ones. . . . We only had two officers on duty for each shift last night,'" Flowers quoted one of the officers as saying.

But whether a department has an officer on every city block or only a dispatcher on the job, police can't protect everyone. And they can't prevent loss. Even renter's insurance can't prevent loss. What it does, though, is make it easier to get life back to normal afterward.

Putting a price on security

How much insurance does one need? Studies by several insurance companies and groups show most renters have roughly $20,000 worth of possessions. It's important to know the value of one's belongings because that's the measuring stick most insurance companies use to set rates.

Talmadge Smith

"Most companies have minimum amounts they'll cover," Smith said. "Our minimum is $15,000 for a single person, and $18,000 for a married couple."

The difference in minimums for singles and married couples is, understandably, that married couples are more than likely going to have more possessions.

Among the reasons so few people have renter's insurance is they're afraid of the cost, or believe they can't afford it.

"They can't afford not to have it," Smith said. "In most cases it’s very affordable. For example, in the city of Tupelo, a single dwelling with $15,000 of belongings is only going to cost about $130 a year."

These rates might be higher now, following the horrendous year insurance companies experienced in the wake of the four hurricanes which struck Florida in 2004, leaving behind billions of dollars of damage. Those losses have forced insurers to raise rates throughout the nation, but how much those rate increases will affect renters in this region is unknown. The best thing to do is to ask a property and casualty insurance agent for a free quote.

In order to determine how much insurance is needed, renters are advised to take a complete inventory of their possessions, listing each item, when it was acquired and the purchase price or current value. Totaling up the amount of these items will give the renter a rough idea of what his or her property is worth. Once this is done, the inventory list should be kept in a safe place away from home, such as in a bank safe deposit box. And consider adding photos to the inventory -- they can help in the event a claim is filed.

Most insurance agents will be glad to help in the way of determining property values, too, so renters shouldn't hesitate to ask.

Different insurance companies charge different rates, so it's best to shop around for the best rate. Smith recommends, though, that renters not only take into consideration which company offers the best rates, but also investigate the level of customer service each agent or company provides. That added peace of mind could make all the difference in the world.

Many insurance companies also offer a variety of payment options, further eroding the argument that renters insurance coverage is financially out of reach. Check with the agents for more information.

What’s covered?

Insurance companies also offer different features in their policies, so it's a good idea when shopping for renter's insurance to get all the facts about what is covered.

Most renter's insurance policies are similar to homeowner policies. A renter's policy will cover furniture, clothing, televisions, stereos, appliances and other personal property subject to the policy deductible. Some insurance agencies, such as State Farm, even offer worldwide protection -- if clothing is stolen from one's car while on vacation, they're covered. But that protection is limited to losses resulting from events listed in the policy. Some of the typical events State Farm lists are fire or lightning; windstorm or hail; explosion; riot or civil commotion; aircraft; vehicle damage; smoke damage; vandalism or malicious mischief; theft; falling objects; and artificially generated electrical current.

But damage or theft aren't the only instances where renters need insurance.

"There is not only coverage for your belongings, but there is also coverage for liabilities," Smith said. "It basically covers everything like a homeowner's policy, but it doesn't cover the building itself."

Liabilities are considered to be negligent acts by the renter. They can protect renters in the event of a lawsuit.
"If you have a guest at your house, and you leave something lying on the floor and they trip over it and fall, break a leg or an arm, or get injured in some way, that's a negligent act by you as a tenant," Smith said. "That's not covered under the apartment complex owner's insurance policy. That would be secondary. You would be liable first, because you committed the act that led to the injury."

In a case of two or more people sharing an apartment or rental house, it's a good idea for each person to insure his or her own belongings. Renter's insurance and other homeowners insurance policies are designed for single individuals and traditional families, so when unrelated individuals share a residence, insurance coverage can become complicated.

According to information obtained from the frequently asked questions page on Insurance.com, laws on this topic vary from state to state, and insurance policies vary from one company to the next. However, most insurance companies recommend each tenant maintain a separate insurance policy to cover his or her personal property. Each person should create an inventory of his or her possessions, so there are no questions about which policy covers which items if there is ever a claim filed.

Some insurance companies allow multiple roommates to be listed on a single renter's insurance policy. If one's insurance company structures policies in this way, the roommates can purchase one renter's insurance policy to cover all of their collective possessions. Each person's name should be listed on the policy, and they should be sure to purchase enough insurance to cover everyone's property. Keep in mind, however, that should a roommate move out and a new one move in, the policy will have to be updated or changed.

Insurance.com says things become even more complicated in the case of unmarried couples living together. Some policies automatically extend coverage to any resident of the policyholder's household who fits the definition of "domestic partner." But these policies are the exception, not the rule. In most cases, each person will need to have a separate renters insurance policy to cover their personal property. But this is not a perfect solution, because even unmarried couples often have joint property. The best option in this case may be to keep detailed records of who actually purchased what, allowing each person to make an accurate claim if the need arises.

Types of policies

Renters should be aware of the different policies and coverages available. Most insurance companies offer actual cash value (ACV) policies, which means the policy accounts for depreciation in the cost of belongings. For instance, an ACV policy will only cover a seven-year-old TV for what it is worth now, not for what it would cost to replace it.

Renter's interested in having more protection should consider stepping up to replacement cost policies (RCP), which means an insurance company will put the renter back where they were by paying to replace those items lost with something similar or with similar features, minus the deductible.

"On a $15,000 policy, this (RCP) will cost somewhere in the neighborhood of an additional $60 per year," Smith said. "But you're protected against any depreciation, and I strongly advise renters go for the added protection. For instance, a gentleman had a big-screen TV that was 10 years old, and lightning hit it. The replacement on that TV was about $2,300. The gentleman paid $250 (his deductible) and his TV was replaced (with a similar unit). If he had had the ACV policy, then he would have had to account for the depreciation, and the TV would have only been worth $300 or $400, and that's all he would've gotten for it."

Filing claims

As was the situation for Flowers, one of the most common reasons Smith has seen for claims being filed is theft.
"Quite a few people break in and steal stereos, TVs, jewelry, furs . . . anything of value that a burglar could pick up quick and leave."

He’s also seen claims filed for a host of other reasons.

"In a multi-unit, you might not know who your neighbor is or what their habits are, whether they smoke in bed or if they're careless with flammables and things of that nature; you don't know what your neighbor might do," Smith said. "You could be very careful, but they could do something and cause you to lose everything you have."

If renters with insurance find themselves victimized at some point or at a loss for other reasons, the security of knowing the policy is there to protect can be reassuring. And he or she should waste no time in filing a claim.
Most insurance companies offer 24-hour service numbers where policyholders can call to report a claim. Even better than calling an 800-number (at least better in the peace-of-mind department), many insurance agents make themselves available personally in times of need.

When the phone calls are made, it's time to get to work reviewing the insurance policy and making note of how much damage is done or how much is lost. It's also a good idea to get independent estimates of the loss, and keep copies of any documents given to the insurance company, and to keep a log of all correspondence with the insurance company. This especially includes telephone calls. And, whatever the case, don’t exaggerate the claim. Knowingly doing so constitutes insurance fraud, an act punishable by law.

Those who have insurance and find themselves filing claims more than likely are thankful afterwards that they did have coverage. Often, the sense of security one has from knowing he or she is protected is more than worth the cost of the policy, especially when one knows that though the thought is terrifying, he or she has somewhere to turn in the event they lose everything they own.

Flowers, who graduated from Ole Miss in December 2002 and now works and lives in Louisville, Ky., doesn't plan to be a victim again. But who plans for such a thing? One thing he is sure of is if he is victimized again, he will be ready.

"I have made an appointment with an insurance guy next week to get renter's insurance," he said. "It will cost me less than 30-50 dollars a month."

Originally published in Tupelo in 2001 and in Oxford in 2003, and updated in 2005. Copyright 2005 Apartment Finder & Newcomers Guide.