Why Purchase Renters Insurance?
If you live in a rented apartment, house or condominium, your landlord's insurance doesn't cover your personal property, such as your electronics, bicycle, jewelry, or furniture, in the event that it is damaged, destroyed, or stolen.
If you live with roommates, research the possibility of purchasing a renters insurance policy together. Some policies automatically extend coverage to any resident of a policyholder's household who fits the definition of a "domestic partner." Otherwise, consider carrying separate coverage for each of the adult tenants.
If you are a student and are a dependent on your parent's insurance policies, your parents should check with their homeowner's insurance company to determine whether your belongings will be covered under their policy.
Is Renters Insurance Expensive?
The premiums for renters insurance average between $15 and $30 per month depending on the location and size of the rental unit and the policyholder's possessions.
To help determine how much coverage you need, make a comprehensive list of your possessions, including purchase prices, model numbers and serial numbers. You can supplement this list with pictures of rooms or items as well. Then, estimate the value of your personal possession, using receipts if you have them. This is the amount of insurance you will need to replace the contents of your home if everything were destroyed.
What does Renters Insurance Cover?
Most renters insurance policies provide two basic types of coverage: personal property and liability.
Personal property coverage pays to repair or replace personal belongings if they are damaged, destroyed, or stolen. This is the most commonly purchased renters policy.
Liability insurance provides coverage against a claim or lawsuit resulting from bodily injury or property damage to others caused by an accident while on the policyholder's property.
Unusually expensive items, such as fine jewelry or an art collection, may require the renter to purchase additional coverage, called a "rider" or "floater". Your insurance agent can help you determine if additional coverage is necessary.
Cash Value or Replacement Cost Coverage
Another important factor to look for when shopping for renters insurance is "actual cash value" vs. "replacement cost" coverage.
Actual cash-value coverage will reimburse you for the cost of your personal property at the time of the claim, minus the deductible. It's important to account for depreciation when considering this coverage option. For example, if a stereo system were stolen from an apartment, five years after the stereo was purchased, the policyholder would be reimbursed for the current value of the system.
Replacement cost coverage, on the other hand, will reimburse the full value of the new stereo system, after you purchase the new system and submit your receipts. While the up-front cost is greater, you are more likely to receive accurate compensation for your possessions.