You Don't Have To Own A Home To Be Protected
Perhaps you'd like to own a home someday. Or maybe you like the freedom of not having a mortgage payment and a house rooting you to one place. That's OK. That doesn't mean that the things you've accumulated from furniture to fine collectibles shouldn't be protected. Think about what it would take to replace everything in your rental house or apartment. Televisions, computers, furniture, even those shoes – they all have value. Do you have the money to replace all of that? Probably not, and that's where renters insurance comes in.
About Renters Insurance
Renters insurance is a type of insurance policy that protects the property of persons who are renting their home. It works much like a homeowners insurance policy except it does not cover the dwelling itself since that does not belong to the tenant. While a landlord has the responsibility of insuring their property, the possessions of the tenant are not covered under that policy, so renters insurance covers that gap. Because you're not insuring a building, the cost is usually very affordable.
In 2014, statistics showed that while 95% of homeowners had some sort of homeowners insurance, only 37% of renters had insurance to cover their belongings.
The 2 Types of Renters Insurance
Replacement cost insurance is insurance that will pay you the amount that it will cost you to replace a damaged item. Even the laptop you bought for $800 5 years ago. This coverage allows you to get the value of a comparable new laptop, which may be close to $800. This type of coverage costs a little more, but it ensures that you will have the money you need to actually replace damaged items.
Actual Value coverage takes into consideration not only your purchase price for an item, but the depreciation as well. That laptop that you bought for $800 five years ago may only be worth $200 today, so that is what you will get from the insurance company. The upside is that your monthly premiums for this type of coverage are considerably lower and you still get credit for what your items are really worth.
What a Renters Policy Covers
Your Personal Property
Think about all of the things you own. It may seem like you don't have much, but all of your clothes, books, computers, electronics even dishware add up. A renters insurance policy should cover your belongings in case they are destroyed or damaged by fire, theft, or wind. This includes when your property is inside your home and, in most cases, outside.
What happens if someone gets hurt while they're visiting you? Are you liable for their medical bills? Yes. A renters insurance policy will cover you against liability of other persons while they are in your home. Even if you overflow the bathtub and damage your downstairs neighbor's apartment, your liability coverage would help pay for that.
If you have a pet, particularly a dog, you may want to address that with your insurance company. Some companies won't insure certain breeds for liability or may increase the cost of premiums.
Other Peoples' Property
What happens if a fire destroys your apartment and you had your best friend's bike in there? Since the bicycle was in your possession, you are responsible for replacing it or reimbursing your friend. Renters insurance covers that, too.
Housing If You're Forced To Leave
A small fire damaged your rental unit. It will be okay, but it needs repairs that will force you out of the unit for 2 months. Are you covered? Yes.
Renters insurance can help pay the costs of living expenses if a disaster should force you from your home.
Source: National Association of Insurance Commissioners, National Apartment Association
What Is Not Covered?
As mentioned earlier, the dwelling itself is not covered by your renters insurance. Since you rent your unit, you don't have to worry about that. Insuring the property itself is a responsibility that falls to the owner.
Flood or Earthquake
Certain disasters deemed "acts of God" are not typically covered. Read your policy carefully so you know exactly what is and is not covered in your area.
If you live in an area prone to flooding or earthquakes or other natural disasters, it may be wise to look into separate coverage for that.
Your Car (or Truck, Boat or Plane)
Vehicles are not covered under a basic renters insurance policy even though they could be damaged in a building fire or similar disaster. You should have a separate vehicle insurance policy that protects your ride.
Harm To Your Pets
Pets are not covered under most renters insurance policies.
Information Lost Or Destroyed
If your computer is destroyed, your renters insurance will cover the cost of the computer. However, the information stored on the computer is not covered, so if you have a remarkable music library or important business information on your computer, you should have it backed up somehow.
Some renters insurance policies do not cover your fine art collection or jewelry. Other exclusions could apply as well.
Make sure you go over your policy closely to make certain that everything you need to have insured is included.
Source: answerfinancial.com, National Apartment Association
How Much Coverage Do I Need?
The classic dilemma with insurance is to get enough coverage for what you need while paying as little as possible. Renters insurance is one of the most affordable forms of insurance, but it doesn't benefit you to cut too many corners.
Inventory Your Possessions
It's easy to underestimate the value of your possessions. Though it may seem like a lot of extra work, going room to room in your home and taking down an actual inventory, including estimated values, will help you get a good idea of how much your stuff is worth. For your more expensive items, it is helpful to take pictures as well. In the event of a claim, all of this information makes it much easier to get your reimbursement handled in a timely manner.
Keep a copy of your records off-premise or in a fireproof safe. What good is a thorough home inventory if it goes up in smoke with the rest of your stuff? A safety deposit box or even a friend or relative's house is a good idea. In the digital age, you may be able to store such records in an online storage site.
When listing your coverage amount, aim just a little high to make sure you have yourself covered. If you find that the cost of premiums becomes a burden, you can always lower it.
Tips for Saving Money
There are ways to save money on your renters insurance without sacrificing good coverage. Here are a few simple tips.
Raise Your Deductible
Your deductible is the amount of money that you pay out of pocket before insurance kicks in. The higher this amount is, the less you'll pay on your monthly premiums. Think about how much you could afford to spend if a disaster should strike. A $500 dollar deductible is good, $1,000 is better.
Bundle With Other Insurance
If the company that you use for car insurance also offers renters insurance, check with them first. By bundling your insurance policies together with one company, you'll usually receive significant discounts. Due to the low cost of renters insurance, the discounts you get by bundling can almost cancel out the cost of premiums.
Does your rental unit have deadbolts, security cameras or an alarm system? If not, ask your landlord if it is possible to have them installed. Most insurance companies will give a discount for homes that are guarded by these basic security measures because they reduce the likelihood of burglary and, therefore, claims.
Non-smokers get better rates on renters insurance. Behind cooking accidents, cigarette smoking is the second leading cause of home structure fires in the United States. If you don't' smoke, make sure your insurance company knows it. If you do, perhaps the extra savings could be just the encouragement you need to quit.
Certain age groups have higher or lower risk factors. Generally speaking, the older you are, the less you'll pay assuming other factors are equal.
Memberships and Affiliations
Some companies offer discounts for a wide variety of people like military, teachers, first responder or police. Be sure to answer all the questions accurately when applying for coverage. It could make a considerable difference.
How to Find Renters Insurance
Many companies that offer home or auto insurance also offer renters insurance policies. The quickest way to find quotes that meet your needs is to complete the secure online form right here at Quote.com!
A little bit of time and a small amount of money can safeguard you from losing everything you own from disaster. Renters insurance is often the overlooked insurance, but it may be the simplest choice of them all.