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Renters Insurance - How it works

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If you are a renter whether it be a home, apartment, or cottage you may need renters insurance. Renters insurance can be a safety net you can not afford to miss. Renters insurance will cover your personal property such as furniture, clothing and electronics if there is a fire, natural disaster or in the event of theft. Don't think your possessions are worth insuring? Even a very small apartment can hold thousands of dollars of your personal property. Your landlord's policy generally only covers the building where you live not your personal belongings or your liability for something that happens in your rented residence.

Renters insurance provides several options depending on your needs and how much you wish to spend on it. Ask yourself, how much are my belongings worth? Could I afford to replace it all should something happen, like a fire? What if someone tripped in my apartment and ended up in the hospital and sued me to pay the expenses? Make a list and add a value to each of your belongings to help you decide just how much renters insurance you need. You might also want to note the year you acquired each item. Store your list in a place away from your residence. Adding photos or a video and any receipts of your possessions to this file will help you if you ever need to file a claim.

A good renter's insurance policy should restore your lifestyle to normal as quickly as possible with minimal costs. There are two types of insurance policies designed to do the above.

Actual Cash Value-Insurance will pay to replace belongings after depreciation.
Replacement Cost-Premiums are usually higher, but it takes what it would cost to replace your belongings at today's prices into consideration.

It is very important to read your policy carefully because some policies have strict limits on certain valuable items such as jewelry, art, antiques, electronics, silver, furs and collections. Coverage for your personal property may include losses caused by a variety of disasters such as fire, explosion, smoke, theft, vandalism, etc. If you have specific items you are not sure are totally covered, like your grandfathers stamp collection, or there are specific disasters that happen in your area such as earthquakes, hurricanes or floods, you need to ask about your coverage for these items under the policy. You can get separate policies for earthquakes and floods and you can get additional insurance on jewelry etc often called a rider or floater to make sure those items are covered to the extent you would like.

Other coverage on your policy may include the following but ask to be sure:

Liability coverage-kicks in when or if someone gets hurt at your place and sues you, leaving you with medical and legal bills.
Living Expense coverage- will help with your expenses if you are forced out of your home due to a covered emergency.
Guest Medical Coverage-pays the bills for anyone injured in your home
Inflation Coverage- Automatically increases the amount of your coverage as inflation changes the cost of living. These changes are reflected in the premium at renewal.
Fire Legal liability-Protects you if you are held legally responsible for any fire damage to the building in which you live.

A renter's insurance policy is usually based on square footage, a general idea of your lifestyle and the value of your belongings. Different insurance companies have different requirements and restrictions regarding dogs and their potential liability. Renter's policies usually cover dog bite liability but ask to be sure and they will want to know the breed of your dog. Don't wait for something to happen and think they will cover the incident, know ahead of time.

Most renters insurance cost no more than $15-$20 per month but in a big city or an area where risk of theft or vandalism is higher the rates maybe closer to $25 per month. You can get the cost down by installing smoke detectors, dead bolts, fire alarms and other protective devices. Most policies also have a deductible, an amount you agree to assume before the insurance company will kick in with their portion up to the amount of the policy. The higher the deductible you agree to pay the lower the cost of the insurance. The deductible applies to property losses only. If you have a roommate they will need to get a separate policy. The risks of not having renter's insurance far outweigh the low monthly expense.

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