What to consider in Renters Insurance

Did you know that your landlord’s home insurance policy would not protect your personal property in case of fire? The insurance policy held by landlords or apartments covers only the building not the items inside. If you think about the cost of replacing your personal effects out of pocket, you would be wise to consider renter’s insurance.

Shopping for a renter’s insurance policy can be tedious. Remember to check with different companies and compare policies. Prices and coverage do vary from insurance company to insurance company.

Be prepared before you start the process. There are many items to consider when shopping for renter’s insurance.

When you purchase renter’s insurance, you are provided with the following types of coverage:

1. Personal Property Coverage

The most basic policy would cover your property in case it is stolen or damaged by storms, wind, vandalism, civil unrest, vehicle damage, theft, smoke damage and aircraft damage, faulty plumbing or electrical surges. Most policies do not cover flood damage, but it may be available as an addendum if you ask.

2. Living Expenses Coverage

This type of coverage would pay for your housing in a hotel if the home is uninhabitable. It would also cover restaurant expenses and general living expenses.

3. Personal Liability Coverage

Coverage of this type protects you from lawsuits that deem you responsible for injuries sustained to a person or damage to a person’s property.

The next items will factor into the amount you will be spending for your insurance premium:

1. Dollar Amount of Coverage

This amount should be the total value of everything you own: clothing, electronics, furniture, appliances, tools, sports equipment, etc. The higher the dollar amount of coverage you choose, the higher the cost of coverage.

2. Deductible

This is the amount you would be willing to pay out of pocket before your insurance policy begins to pay. If you select a higher deductible you will pay a lower monthly/yearly premium. Conversely, if you select a lower deductible, you will pay a higher premium.

3. Actual Cash Value or Replacement Cost

Actual Cash Value is the amount the insurance company will pay you for the items lost. Generally, the amount you are reimbursed is the value of the property at the time of loss. Replacement cost will replace the item lost. Items that are prone to theft (guns and jewelry) should probably be placed on a separate policy.

4. Location and Previous Claims

If you rent your home in an area that is deemed prone to theft according to the number of claims filed in the area, your policy cost may be higher.

There are many benefits to purchasing renters insurance. In case of emergency, you will not have to worry about the expense of living away from home while it is uninhabitable. Your personal effects will be replaced or you will be reimbursed for them. Even if you think your personal property is not worth enough to insure, remember the amount it would cost to replace it.