On January 21, 2015, residents of Avalon at Edgewater, a luxury apartment complex in Edgewater, NJ, suffered devastating loss in a fire. All told 240 of the 408 units in the complex were destroyed and 500 tenants were displaced. The cause of the fire was due to maintenance workers performing plumbing repairs with a blow torch in the wall of an apartment.
In another article I found online quoted a firefighter at the scene who said that fire was probably the worst he had seen in the 39 years of figthing fires. To him what made this loss different from the others he experienced was the great loss of peoples homes and many had nowhere to go.
Many people go without renter’s insurance based on a misconception that when a tragedy like this occurs the landlord will cover their personal belongings. However most, if not all, rental agreements contain language that says the landlord is not responsible for the renters personal belongings.
What Options Exist to Renters
Renters have two options when renting a home or an apartment: 1) Sue their landlord when something happens. 2) Buy a renter’s insurance policy.
Taking your landlord to court is an option. In fact, one law firm filed a class action suit within days of the Avalon Fire. They sued for:
- Loss of Use or deprivation of property
- Reimbursement of rents paid during which the apartments are uninhabitable
- Recovery of any improvements made by the tenants
- Expenses such as food, clothing, housing, relocation, transportation, medicine, medical treatment
By November 2015 the lawsuit (combined with two other separate suits) was still being litigated. Eventually the lawsuits were settled for an undisclosed amount. This process took almost a year even though the initial lawsuit was filed within a week of the fire.
Circle back with me to the four items the lawsuit was pursuing against the landlord. Notice something missing? The suit was not asking for money due to loss of personal property. Perhaps this was intentional because the rental agreement may have stated the landlord was not responsible for personal belongings. Kudos to the lawyer who was able to find out what they could legally go after.
While you are waiting for the lawyers to pursue the landlord, how do you address your immediate need to replace what you lost and live somewhere else?
You can move in with friends or family, rely on the kindness of strangers, or dip into your savings accounts or 401(k) plan to find cash you need. For those who don’t have any of the above or very little cash savings there are homeless shelters.
What Does Renters Insurance Cover
There is a low cost alternative and that is a renter’s insurance policy. This policy covers your personal belongings and provides a stipend to pay to live somewhere else if a covered event, like a fire, destroys your apartment. When you file a claim to your insurance company you could receive proceeds within days. Compare that to how many months it would take to sue your landlord.
You set a dollar amount to cover your personal belongings and choose a deductible that you are willing to pay. A higher deductible will also translate into lower premiums.
A renter’s policy covers your personal belongings if you suffer a loss caused by the following
- Fire or Lighting
- Windstorm or Hail
- Riot or Civil Commotion
- Smoke Damage (This can be smoke damage from a fire in a nearby building or even an emission or puff-back of smoke from a house’s heating system)
- Vandalism or Malicious Mischief
- Theft (although be aware when it comes to theft of certain items like jewelry your policy may only give you a small amount of coverage)
- Falling Objects (this deals with objects that fall through the roof of your building and damage your inside property)
- Weight of Ice, Snow or Sleet
- Accidental Discharge or Overflow of Water or Steam (An example: the emergency discharge valve on your hot water heater fails and water is discharged from the system, destroying your personal belongings)
- Sudden and Accidental Tearing Apart, Cracking, Burning or Bulging (An example is your apartment’s hot water heater bursts and your property is damaged because of it)
- Freezing of Plumbing
- Sudden and Accidental Damage from Artificially Generated Electrical Current (although electronic circuits in TV’s, computers, appliances, and other entertainment devices are not covered. Which begs the question, “What is really covered by this peril?”?)
- Volcanic Eruption (I know we don’t see much of this in NJ but if a Mount Saint Helens was to arise in the Pine Barrens…)
Most claims that occur against renters are from Fire, Lighting, and Windstorm damage. Not that we have not seen a plane crash into an apartment before, but the chances of a fire or lighting strike are much greater.
Most renter’s insurance policies are inexpensive. You most likely will pay less per month than the cost of dinner for two at a typical New Jersey diner.
If you rent a house or an apartment, buying a renter’s insurance policy is a sound way to protect what matters to you most and to help you maintain your standard of living in the event of a loss. Also you will have access to the policy proceeds in a matter of days.
In business and in life, sometimes you just can't see it coming. That's why there's Rue Insurance. Not just insurance brokers: we are your insurance advisors. We've been helping our clients portect their assets and improve their bottom lines for nearly 100 years. Be Ready With Rue is our commitment to help you identify risks and customize a strategy to reduce or eliminate your potential costs. Don't let a disaster ruin you financially, Be Ready With Rue.
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