Run for Coverage
Fortunately renter’s insurance offers an easy and affordable way to protect yourself from all sorts of losses, both inside and outside your home. It covers your possessions against losses from fire and smoke, theft, vandalism, lightning, wind, explosions, and water damage from leaking plumbing.
Things you take with you away from home are also generally covered, though the amount of coverage may range from 10% of their value to full replacement cost, depending on your policy. You may also be covered for things you borrow that are lost, stolen, or damaged while you have them.
Renter’s insurance will also cover your liability for injuries people suffer in your home or from your pets.
It also pays legal costs you might incur if you get hit with a liability lawsuit, though there may be a substantial deductible for this protection.
Evaluate What You Need
Before you buy renter’s insurance, you should inventory your possessions to determine the amount of coverage you need. Document what you have with photographs or a video and make a detailed list of your possessions to keep as backup in some other location, like your office or a safe deposit box.
Don’t be too conservative in your estimate of what your belongings are worth. What might seem at first glance to be a small inventory may actually be worth a substantial amount in replacement costs. Make a note of the model and serial numbers of your expensive electronic equipment and appliances, get written valuations of jewelry, art, or family heirlooms, and keep detailed records of any collectibles.
Once you have a sense of how much coverage you’ll need, look for an insurance company that offers this type of policy. If you’ve worked with an agent to buy car insurance, for example, see what your auto insurance company has to offer. It also pays to do an online search so you have a sense of the range of costs and coverage. Before deciding on a policy, be sure you understand the limits of coverage and the terms and conditions that apply. Comparison shopping is every bit as important when you’re looking for insurance as it is with the other things you buy.
When You Have a Loss
Renter’s insurance works the same way as other types of insurance. You pay an annual premium, and if any of the losses covered under your policy occur, you file a claim. A deductible applies, which you pay out of pocket. The larger the deductible is, the lower the premium tends to be. That’s one of the tradeoffs you have to evaluate in buying the coverage.
If you have a loss that’s covered by your policy, you are compensated in one of two ways. If you have an actual cash value policy, you’ll be reimbursed for what the item was worth at the time it was damaged, stolen, or lost. For example, if you file a claim for a destroyed computer that’s several years old, you’ll receive significantly less than you paid. But if your claim is for an asset that appreciated in value, such as jewelry, you should get more than the purchase price. Fortunately, many insurers offer replacement value policies, which pay what a similar item would cost today. That’s generally a better choice.
Renter’s insurance doesn’t protect you against everything that could go wrong in your home.