About Renters Insurance: An Overview of This Policy Type

It’s estimated that 85% of those that rent apartments have no insurance coverage to protect their property or themselves. If you are considering renters insurance, you may be surprised at how affordable it can be.

Before you choose a policy and sign on the dotted line, remember that it pays to be informed. Here you’ll learn what you should know about renters insurance and how to choose the right type of coverage for your needs and budget.

Choosing the Right Level of Coverage
When you decide to get renters insurance, one of the first questions you may ask yourself is, “How much coverage do I need?”

Historically, people underestimate the amount of money it would require to replace everything they have. To avoid this from happening, take inventory of your belongings either by taking pictures as you go through your place, or better yet, use a video camera to pan over the type of stereo you have, your closet, all of your CDs, an original painting and the signature of the artist, and so on. If you’re still not sure, just know that it’s better to have too much coverage than not enough; and the price difference between $30,000 worth of coverage and $40,000 could be relatively low.

Look for Discounts to Save Money
If you already have an auto insurance policy, you should be eligible for a multi-line discount from your current insurance company, so ask your insurance agent. If you would like to confirm whether you’re getting the best deal from your current carrier or do not currently have an auto insurance policy, you can take advantage of the ease and speed of online insurance quote websites like NetQuote. NetQuote enables you to complete just one application conveniently online – anytime - and receive multiple quotes to compare and choose from.

If you have safety features within your home, like deadbolt locks, fire alarms and a fire extinguisher in your apartment, make sure to tell your insurance agent and ask about this type of discount.

Liability Coverage
What you may not know is that renters insurance also includes liability coverage. This protects you in the event you are found liable for an accidental injury to another or if you cause property damage to your apartment and/or the apartment building.

Liability coverage is standard in a homeowners insurance policy, which provides on average $300,000 worth of coverage. The difference in a renters insurance policy is that the standard coverage is $100,000. You can easily increase this amount to $300,000 for a slightly higher premium, and at this level it better covers you in the event of an accident or injury if you are found liable.

Actual Cash Value vs. Replacement Costs
Renters insurance policies typically include what is called actual cash value (ACV) for your property should you need to make a claim. If you’re not aware of this, it could end up costing you. This type of coverage only pays on the cash value less depreciation of the item for wear and tear. This means that the $2,000 stereo system you bought five years ago may only be worth $800 today. And that’s just one item from your apartment.

The better choice is replacement cost coverage, which reimburses you for the cost to replace your stolen or damaged item with a new item of equal or lesser value. You need to have your insurance agent add it as a rider to your policy. It only adds a few dollars to your annual premium and covers your property with the amount to actually replace an item with a new one.

Valuable items
Most renters insurance policies limit coverage to $1,000 per item on high-priced property such as jewelry, computer equipment, stereo equipment and antiques. If you have a $5,000 engagement ring, spent $2,500 on your stereo system, or have more than a few thousand dollars invested in your computer, hard drive, printer and scanner, you could be out a large amount of money.

Ask your insurance agents to add a rider that includes coverage for valuable items and make sure you have documented your inventory of these items in the event of a claim.

Your Property in a Storage Unit
One of the obvious drawbacks to living in an apartment is not having a garage, so if you need to use a storage unit to hold your extra stuff, is it covered? Yes - and no, depending on the value of the property you have sitting in a storage unit.

A typical renters insurance policy will cover 10% of your property that resides off your premises. If you have a renters policy with $50,000 worth of coverage, then your property in the storage unit is covered up to $5,000. If your property’s value exceeds 10% of your renters policy coverage, then we recommend buying insurance from the storage unit provider.

Renters insurance is of course, not limited to those that live in apartments. Many rent condos, homes and townhomes, filled with valuable property. The peace of mind that renters insurance provides for the purchase price makes it worth your time to shop around for the best policy that fits the way you live.