How To Get The Best Renter's Insurance Coverage

By Carla Turchetti. May 7th 2016

While there's no law that mandates that a renter buy insurance coverage, some landlords require their tenants to purchase renter’s insurance. For renters, this can often cause confusion and lead to questions. What kind of insurance is available for renters? Should every renter buy a policy, even if they are not required to? What does a renter's policy cover and how much does it cost? To clear up this confusion, there are several important things that every renter should know.

Your Landlord’s Insurance Coverage Won’t Help You

If you’re a renter, you are renting your home from a landlord who has insurance. But that insurance covers what happens to his or her building. It has nothing to do with anything that might happen to your possessions.

Consider this example. During a terrible thunderstorm, a tree is uprooted and lands on the roof of your apartment building. The landlord has the insurance coverage to remove the tree and make repairs to the roof and the damage to the floors inside.

But the landlord's coverage won't help you out with the 52-inch flat panel television that fell off the wall when the tree hit. Nor will it help you with your new microfiber sectional that has been soaked by the rain. And now you're out of the apartment for six weeks while the repairs are made. What can help you with those expenses? Renter’s insurance can.

What Renter’s Insurance Covers

Renter’s insurance can protect you when your possessions are lost or damaged by theft, fire, storm damage or even by pipes that have burst in the building.

Most renter’s coverage also protects you if someone visiting your home is injured unintentionally. If a guest trips over the dog's bowl in your kitchen and breaks an ankle, renter's insurance can help with medical coverage for your visitor. If that guest decides to sue you, renter’s insurance can provide coverage that helps with legal fees and damages that might be awarded.

Some policies are written to cover the cost of living expenses if the home you rent becomes uninhabitable and you have to vacate.

If you have expensive jewelry, electronics or other valuables, you might want to purchase additional coverage for these items. Additional coverage is worthwhile if you have valuables that exceed your coverage limit. (For more information on jewelry insurance, see Jewelry Insurance.)

Two Types Of Renter’s Coverage

There are two main types of renter’s coverage. You can select a renter’s insurance policy that covers the actual cash value of your belongings or you can get a policy that covers the replacement cost value. An actual cash value policy will pay you for what your belongings were worth at the time they were lost or damaged. A replacement value policy will pay the cost of what it takes to replace your belongings. Because the replacement value is generally higher than the actual cash value, replacement value polices generally have higher premiums.

What Does It Cost?

Renter’s insurance is relatively cheap. The typical annual expense is $85 to $350. Like most insurance policies, the exact cost will vary by geographical location.

The cost of renter’s insurance is also affected by the amount of coverage that you buy. The larger the amount of coverage, the more you will pay. For example, 50 thousand dollars of coverage will be more expensive than 30 thousand dollars of coverage. To avoid paying more than necessary, make sure that you get an accurate sense of the total value of your possessions. It does not make sense to purchase coverage that you do not need.

Many of the large insurance carriers offer spots on their websites for quick coverage estimates or personalized quotes. Keep in mind that you might find the best deal by bundling the renter’s coverage with your auto insurance.

Take An Inventory Of Your Possessions

Insurance experts warn that many people underestimate the value of their possessions when deciding how much coverage to purchase. Therefore, it is recommended that you take an inventory of your possessions before you purchase a policy. This will allow you to add up the total value of all your possessions and choose an appropriate level of coverage.

You can take pictures or videos of your belongings and then store them in a safe location with your receipts. When you make big purchases, add those receipts to your records as well. Some of the large insurance companies now have mobile apps that allow you to keep an inventory on your phone.

How To Save Money

The best way to save money on renter’s insurance is to shop around. Go online and compare quotes from the major insurers like State Farm, Farmers, Progressive, etc. Ask friends and family for recommendations. Make sure to stick with reputable companies to reduce the chances of fraud.

Another way to save money is to select a policy with a high deductible. A deductible is the amount of money you must pay for damages out of pocket before your insurance kicks in. Generally, the higher the deductible, the lower the cost of the insurance. Remember that you should never opt for a deductible that's higher than the cash you are likely to have on hand.

Should You Buy Coverage?

Even if you are not required to buy coverage, it might be a good idea for you to purchase it. Figure out how much your possessions are worth and decide whether it makes sense to purchase coverage. Those who live in areas with severe weather or high crime rates should seriously consider purchasing coverage. Although damage and theft might seem like a remote possibility, you’ll be glad you have coverage if the unexpected occurs.

Buying renter’s insurance gives you piece of mind. If you rent an apartment and you have the coverage, you know that even if disaster strikes you have established a system to pick up the pieces and move forward.

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