StevenLaura

Renter's Insurance - Sort of...

We found out a few days ago that someone's insurance company is holding us responsible for the damage to the apartments from the pipe bursting incident. This is no surprise, as we did not leave our heat on. We sent off the stuff to our insurance company to deal with, since we have enough liability insurance to cover the reconstruction of the entire building (almost). In conversation with our insurance company's representative, I found out a neat aspect to our renter's insurance policy: it does not cover the apartment that we are renting. Sure, it will cover the damage to all the apartments around us, which we might be liable for, but not for our liability for our own apartment. So now we have to deal with a bill from our apartment complex for the work they did to fix our apartment.

In theory I know that this is all legal and whatnot. We signed the contract, we have a copy of the policy, which I had to study for about 45 minutes before I concluded that they were correct. Still, it seems that something wrong is happening here. When we signed up for the policy, I imagined that this was precicely what the policy was for. It never occured to me that we would pay for these damages.

As an economist I understand why they create the policy the way that they do. If this insurance incurred no cost to us in the event of negligence (like leaving the heat off in Dec/Jan). Then there would be little incentive for us to take care of our apartment and be cautious. It seems that a better way to do that, though would be with a deductible like they have on our other policy, which covers our possesions (no, the policy covering our possesions does not cover our apartment, since we do not own it.)

Well, here I am talking economics on our non-economics/politics blog sorry, I will stop now.