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How does renters insurance cover cash?
Renters insurance covers cash the same way it covers all of your personal property. If your cash is stolen or destroyed by a covered peril, such as a fire, you can file a renters insurance claim and your insurer will reimburse you for the amount that you lost.
However, most insurance companies place a cap, called a sub-limit, on how much they’ll pay out for certain items. In most policies, the sub-limit for cash is quite low, often around $200.
That means that even if you have $15,000 in personal property coverage, your insurer will only pay out a fraction of that for stolen or damaged cash, no matter how much you actually lost. If someone breaks into your apartment and walks off with a stack of bills totaling $1,000, your provider will only reimburse you $200 (or whatever your policy’s sub-limit happens to be).
Why renters insurance cash coverage is limited
Insurers place sub-limits on cash for several reasons:
1. Cash is harder to provide documentation for
When you file a claim, you usually have to provide some sort of documentation to your insurer so that they can determine:
- What you lost
- How much it was worth
- Whether or not you were the original owner of the item
Providing this documentation is fairly straightforward for most items (especially if you created a renters insurance home inventory when you took out your policy).
However, it’s more difficult to document your personal cash inventory because the amount of cash that most people keep fluctuates from day to day. Also, unless you’re a bit of an oddball, you probably don’t photograph your cash every time you withdraw it from the ATM.
2. Cash incurs a moral hazard
Moral hazard refers to the risk that an insured party will file a false claim in an attempt to get money from their insurance company — in other words, that they’ll commit insurance fraud.
Even if you’re an upstanding individual who would never do that, there are plenty of dishonest people out there who would. And cash claims leave renters insurance providers particularly vulnerable to fraud.
To understand why, imagine that someone withdraws $1,000 intending to use it to get their car serviced, but instead they spend it all in one night at the bar. The next morning, they understandably have regrets, so they call up their insurance company, claim that they were robbed for $1,000, and wait for their reimbursement check to arrive.
Cash claims like that are very difficult for insurers to investigate, so to protect themselves, insurers place sub-limits on cash to make fraudulent claims less tempting.
How to increase your policy’s cash sub-limit
If you want to cover your cash more comprehensively, you might be able to add a renters insurance rider to your policy that will increase its cash sub-limit. There’s no guarantee that they’ll offer this rider, but it’s possible.
Check your insurer’s website or call and ask to speak to an agent for more info.
What types of cash are covered by renters insurance?
Renters insurance covers all of the following items, and treats them identically to cash (which means that your policy’s sub-limit applies to them).
- Paper money
- Gold and silver bullion (i.e. not goldware, silverware, or jewelry)
When does renters insurance cover cash?
If your cash is stolen
The most common peril that threatens cash is, of course, theft.
Theft is a covered peril in all renters insurance policies, and your stolen cash is covered no matter where in the world it is. If your wallet is stolen while you’re traveling, or if somebody breaks into your car and steals cash from your glovebox, the loss is covered.
Many renters insurance policies only cover property stored off-premises up to a certain limit (usually 10% of your total personal property coverage). Given the low sub-limit that applies to money, this “off-premises” limit will probably never be a factor when it comes to cash money claims.
How to secure your cash from theft and other perils
Because insurers cover cash up to such a low limit, we recommend keeping as little of it in your home as possible. Obviously you should keep enough in your wallet to pay for everyday expenses, such as restaurant meals and groceries, and it’s OK to keep a few hundred dollars in your home for emergencies. But for most people, there’s no need to keep more than that on hand.
The best way to secure your cash is to just keep it in your bank account. (You can lock your debit and credit card if either is stolen.)
However, if you absolutely need to keep large amounts of cash on hand, consider keeping it in a safe. Save your ATM withdrawal receipts to document how much you withdrew and when you withdrew it. (Make sure to always get a receipt — although you usually don’t need receipts to file a renters insurance claim, they make filing cash loss claims much easier.)
How do I file a renters insurance claim for stolen or destroyed cash?
If your cash is stolen, file a police report immediately, and if your whole wallet was stolen, call your bank and credit card companies to freeze your credit and debit cards.
Regardless of whether your cash was stolen or destroyed by a covered peril, make sure to collect as much documentation as possible before contacting your insurance company.
Collect the following documentation:
- Police reports
- Bank statements
- Credit card statements
- Recent ATM receipts
After gathering your documentation, call your insurance company to file a claim.
If you’re filing a cash-only claim, you don’t need to pay your renters insurance deductible — which is good, because unless you chose an unusually low deductible, it’s probably larger than your policy’s sub-limit on cash. (If other possessions were stolen along with your cash, you’ll have to pay your deductible before your provider reimburses you for them.)
If your claim is cash-only, think carefully about whether it’s worth filing at all, given the low amount that you’ll receive from your provider. Filing a claim will probably make your future renters insurance premiums go up. In general, you should only file for major losses — and unless you’re really strapped for cash, a $200 payout probably doesn’t qualify.