How to Buy Renters Insurance
The last thing you want to think about when you rent a new apartment is something going wrong. You want to consider lighting choices and where to hang your black-and-white photos — not the possibility of a fire or burglary. No need to worry, here’s everything you need to know about renters insurance. Read on and sleep easy!
What is renters insurance?
Renters insurance is an insurance policy that protects you from a variety of perils that might occur primarily to apartment-dwellers. Think about it this way: When you own a home, you purchase homeowner’s insurance. When you rent, you get renters insurance.
Insure.com provides the following list of losses that are included in an HO-4 policy, which cover renters (HO-6 policies cover condo owners):
- Fire or lightning
- Windstorm or hail
- Explosion
- Riot or civil commotion
- Aircraft
- Vehicles
- Smoke
- Vandalism or malicious mischief
- Theft
- Damage by glass or safety-glazing material that is part of a building
- Volcanic eruption
- Falling objects
- Weight of ice, snow, or sleet
- Water-related damage from home utilities
- Electrical surge damage
If you live in an area where flood, hurricane or earthquakes are a possibility, you will need to purchase a separate policy or a rider in order to protect yourself against these threats.
What do I get for my money?
A good place to start looking for coverage is with your current auto insurance provider. You will often get a better rate for owning multiple policies. First, you need to decide how much coverage you want. Typically, depending on your location, you can purchase a policy that covers at least $15,000 in personal belongings and several hundred thousand in liability for a couple hundred dollars a year.
The next major consideration is the type of policy you are being offered: Actual cash value (ACV) or replacement cost. ACV coverage will only pay you for what your belongings were worth at the time they were stolen or damaged. You will pay higher premiums with replacement cost coverage, but if something happens you will be paid the amount that it will actually cost to replace your items.
You’ll also need to let your insurer know of any particularly valuable items you own, like a piece of jewelry or expensive electronic equipment. If you purchase a separate rider for these items, they will be covered individually. Most policies do include liability coverage that will cover the costs for any injury to yourself or visitors to your apartment. Policies can also include specials provisions (i.e. waterbed liability that covers any water damage resulting from a broken bed). If you have something like this in your home, double check your policy to make sure it is included.
If you or your landlord has installed smoke detectors, fire extinguishers or burglar alarms, you may be eligible for a discount, so be sure to mention these when you purchase your policy.
Another important provision included in most policies is coverage for additional living expenses. This means that your insurer will cover your living expenses in another location if your apartment becomes uninhabitable. The typical limit is 30 to 50 percent of the total value of the policy. You will be limited to what your company considers a reasonable length of time for rebuilding or relocating — often twelve months.
What do I need to do to protect myself?
After you move in, take inventory of all the items in your apartment. Insurers state that most people underestimate the value of their possessions and therefore don’t have enough personal property coverage. Experts recommend making an inventory of each item, including its value and serial number. You should also photograph or videotape each room and be sure all the items of value are clearly visible. If you make any major purchases, keep the receipts. Be sure to store all the documentation in a fireproof box, on a digital file with online access or in a bank safety deposit box so that your proof is not destroyed in the event of a fire or natural disaster. If you own a dog, be careful—some breeds are often not covered by insurers.
Remember that like other types of insurance, your premium depends on factors like where you live, your company, your deductible and any additional coverage you purchase. If you want to pay less for your policy, consider choosing a higher deductible. This is the amount you have to pay if you do have to use your policy. For example, if you have a kitchen fire, you may have to pay a $1,000 deductible before your company will contribute money for additional damages.
Renters insurance is one of the most overlooked types of policies. However, those who have had to use it know its value. Buying a policy insures not only your belongings but also gives you peace of mind—and that’s something hard to put a premium on.
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