How to choose the right level of renter’s insurance for you

How devastated would you be if your apartment was robbed or destroyed by fire? How much financial loss might you incur if you had to replace your valued possessions? Thinking about these questions is the first step to deciding how much renter’s insurance you need. If you live the lifestyle of a monk with very few material possessions, then the chances are you will only require a low level of insurance. However, if you’re the type of person who loves all life’s mod cons, including sound systems, wide-screen TV, games consoles, etc., then you stand to lose a great deal should something bad happen.

Preparing for the eventuality of bad things happening is the essence of insurance. We hope, of course, that nothing happens (and may slightly begrudge paying those insurance premiums) but most of us like the peace of mind that is provided by having adequate insurance cover in place, just in case. The key, then, is to work out how much cover constitutes “adequate cover”? Too little could be disastrous but, equally, too much will mean that you are paying more in premiums than you need to.

To determine the amount of coverage that you require, you should conduct a simple audit of your possessions. Your landlord’s insurance should cover any damages to the actual building (although it’s worth checking this), so your focus will be upon insuring your personal possessions. Create a list of items and mark their replacement value, and then work out their total combined value. Renter’s insurance can cover either the replacement value of your possessions (what it would cost to replace them) or the actual current value (which may be substantially less due to depreciation). It’s usually advisable to cover the replacement value even though premiums may be a bit higher. When you go to apply for renter’s insurance, you will be asked to confirm the amount of coverage that you require. Having taken some time to work out your potential losses you will be better placed than most to identify the coverage that is appropriate for you.

An additional factor to be aware of is damage caused by floods or earthquakes sometimes aren’t included as part of the basic renter’s insurance package. If you live in an area that is susceptible to these natural disasters, then it may be prudent to ask for these to be covered as add-ons to the insurance policy.

There’s no doubt it is often tempting for those who are renting to skimp on renter’s insurance. After all, many are young people who are just starting out on their work life for whom every dollar counts. However, neglecting renter’s insurance may prove a costly false economy if you do find yourself having to deal with the sad after affects of a theft, fire, flood, or other calamity. Having the right level of insurance cover in place needn’t be overly expensive and will allow you to sleep more easily, safe in the knowledge that you’re covered should the unthinkable become a reality.