Whether you’re in the process of renting your first place or a seasoned renter, it’s important to protect yourself and your assets.
While your landlord is responsible for having property insurance to protect the physical building from damage, they are not responsible for anything that happens to your personal property. That’s where having a renters insurance policy helps.
Though it may feel like an unnecessary expense, having renters insurance can save you big time in the event of an accident or disaster.
Renters insurance ensures your personal property is protected if it is lost, stolen, or damaged. It also helps with additional living expenses if your residence becomes uninhabitable.
Here are four things to know about renters insurance that will ensure you get the most out of your coverage and policy.
Know What Renters Insurance Covers
While policies can vary depending on your needs, most offer coverage for the following:
Personal Property: This covers costs to repair or replace your belongings if damaged or stolen due to a loss covered under your policy. This can include everything from your furniture and electronics to clothing and jewelry. Depending on the policy, renters insurance can also cover property when it off your premises, such as a stolen bicycle and laptop.
Living Expenses: If your residence becomes uninhabitable, your policy can cover relocation costs as well as anything considered an extra expense within the policy limits. Known as additional living expenses, this can include reimbursement for everything from hotel bills and laundry to meals and storage.
Personal Liability: If an injury occurs or a personal item is damaged due to negligence on your rented property, a policy’s personal liability coverage can help you pay unexpected medical bills, legal expenses, or damages.
Know How To Determine Your Insurance Needs
To determine the amount of coverage you need for your renters policy, it’s important to get an idea of how much it would cost to replace your belongings.
To do so, you can create a home inventory checklist to get an estimate of how much your personal property is worth. Once you have an idea, you can then decide how much insurance you need to purchase.
Aside from helping you calculate your coverage needs, having a home inventory checklist is useful to have around in the event you have to file an insurance claim.
Not sure how to create a proper home inventory checklist? Don’t sweat it. Our FREE Adulting is Hard Guide has you covered.
Know How To Save On Your Renters Insurance
There’s no reason to pay more than you need for renters insurance. After building a home inventory list to accurately assess your coverage needs, there are a few ways you can reduce costs.
One option is to decide if it is worth adding additional coverage. If you feel comfortable with the basic policy limits offered there is no need to increase the coverage or add on a separate policy.
Another option is to select a higher deductible (i.e. the amount you pay before insurance kicks in to cover costs). Just keep in mind while payments will be cheaper, you will pay more out of pocket in the event of a claim.
You also may want to consider bundling options and ask about any discounts offered. Bundling insurance policies with one carrier can help save, and many insurers will also offer discounts for safety features in your residence such as smoke alarms or security systems.
Know How To Shop For The Right Plan
Before buying renters insurance, as with any other type of personal insurance coverage, make sure to shop around, compare different plans, and weigh your deductible against your premium.
Keep in mind there are two types of renters insurance policies you can choose from: replacement cost policies or actual cash value policies.
A replacement cost policy covers items at their replacement cost value (RCV), meaning you would receive the amount of money you initially paid for them. For example, if you lost a five-year-old laptop, your payout would cover the cost to replace it with a new, similarly priced one. While this policy costs more, it is worth considering if you have higher-end possessions you would like fully covered.
An actual cash value policy replaces items at their actual cash value (ACV), meaning you would receive the amount of money for the current market value of your items. For example, if you lost a five-year-old laptop, your payout would cover the cost of its current value rather than what you paid when you initially purchased it. You would then be left to pay the difference at your own expense.
As always, if you need help weighing the costs and benefits of different renters insurance plans, talking with a trusted insurance professional is your best bet. A local insurance broker can help you simplify the process and ensure you’re finding the best coverage possible.
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