Many people that rent their home don’t realize the need for renters insurance.
You are not Protected by Your Landlord's Policy
One of the biggest misconceptions among renters is that they believe their belongings are covered under the policy their landlord has for the property. Nothing could be further from the truth; while your landlord does have insurance coverage on the property, his coverage will only cover damage or loss to his property. If you want your personal belongings covered, the things that belong to you inside the house or apartment, you must carry renters insurance. If not, you could lose everything you own in the event of a fire, flood, break-in or other loss. In fact, it is becoming more common for landlords to require their tenants to carry renters insurance.
Deciding if You Need Renters Insurance
The decision to carry renters insurance is a decision you will have to make on your own. What you want to ask yourself is how much are my belongings worth? And can I replace them if they are stolen or destroyed? If your belongings are worth more than you can afford to pay out in one lump sum then you should take out renters insurance.
Deciding How Much Coverage You Need
Deciding how much renters insurance coverage you need is actually a simple process. The best way to determine how much coverage to purchase would be to add up the cost of all of your belongings. Once you have done your inventory and come up with a total amount, you should be able to discern the amount of renters insurance to purchase.
Deciding on the Deductible Amount
Deciding on how high to set your deductible amount is another simple calculation. Set your deductible at a level that you can easily cover, common deductible amounts range from $500 to $1,000. If you can easily pay out more then set your deductible higher, the higher you set your deductible the less your insurance premiums will cost.
Renters Insurance Options
There are two types of renters insurance coverage to choose from. One is called “actual cash value”, or ACV and the other is called “replacement cost” coverage. In the event of a loss, actual cash value insurance coverage will pay you the exact amount you paid for your belongings minus depreciation. For example, you put in a claim, one of the items in your apartment is a sofa that you purchased two years ago for $1,000. Your insurance provider will determine the depreciation of the sofa over those two years and that will be your compensation so you may only receive $700 for a sofa that might now cost $1200 to replace. On the other hand, you can choose replacement cost coverage for your belongings. While replacement cost coverage costs a little more than ACV, it is worth the cost in the long run. The reason you should choose replacement cost renters insurance is because you will receive enough money to replace all of your belongings, no matter their age at todays' market value. So now, when you make your claim you would receive $1200 instead of $700 for your two-year-old sofa.
Saving Money on Renters Insurance
There are several ways you can save money when purchasing renters insurance. First, use the same insurance company where you have your car insurance. There are discounts being a non-smoker, having deadbolts on all exterior doors, a fire extinguisher inside your unit and interior sprinkler systems.
Other Information about Renters Insurance
Flood and earthquake coverage are not included on renters insurance policies. Dogs are another issue when it comes to both renters insurance and home insurance as there is a list of several dog breeds that most insurance companies will not cover due to the risk involved with owning certain breeds. Some insurance companies will still cover these breeds but they will charge higher premiums or exclude animal liability claims.