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

Renter’s insurance comes in many levels and varieties.  Determining which level is right for you is primarily dependent upon how much you want to spend.  You, the renter, must determine what plan is best to meet your needs.  The primary factors you must consider are: 1) what risks exist, 2) what is the value of your property, and 3) if you must sacrifice certain areas of coverage to keep cost down, which areas are least likely to be needed.

When it comes to risk, you must assess what dangers to your property are most probable.  Many events may occur which are outside of your control, so, to determine which are most likely to lead to loss or destruction of your hard-earned property,  you must consider the following:

1)      What natural disasters occur in the area, and what is the potential for that disaster to occur?

2)      What is the local crime situation?

3)      What mitigating or preventative measures exist in the structure where the property is stored?

If you live in an area of high risk for loss or destruction of your property, coverage in those high-risk areas is going to be more expensive, but it is also important that you have it.

The value of the property you wish to cover determines how much coverage you must purchase in the policy.  When determining the value of the property to be covered, consider the following:

1)      What property will need to be replaced if everything is destroyed?  Do not forget to include items such as clothing, bedding, and kitchen supplies.

2)      How much would it cost to replace all of those things?

3)      What high-value items need to be covered?

4)      Do you need liability insurance to cover guests in your home?

Remember there is a difference between Cash Value and Replacement Value.  Cash Value means the policy will only pay the actual amount the item was worth at the time the claim is made.  Replacement Value covers the actual cost of replacing the item.

Sometimes, to keep the cost of the policy down, you will have to sacrifice certain aspects of the policy.  These are some difficult choices to make, but keep in mind the risk assessment from the first section.  If you are in an area with a high risk of fires, you might need to sacrifice flood protection for fire protection.  Or, you might choose to keep your most valuable items in a fire-proof safe and ensure you have theft protection to protect those items that way. 

Whatever you decide, talk to your insurance company to determine what levels of coverage they have and which are right for you.  They will be able to help you determine which discounts you might qualify for and ways to adjust coverage and deductible rates to get you into the right plan to protect you and your family.