Renter's Insurance

Renter's Insurance

Being a renter makes you no less susceptible to theft or peril than a homeowner. Nor does it make you any less concerned for your personal property. Why, then, do so few people consider renter's insurance? Perhaps a lack of good information is the reason why people take the chance of leaving their property uninsured.
Cost could be cited as a prohibitive factor if it weren't for the fact that renter's insurance is surprisingly inexpensive. The average cost of renter's insurance is $200 a year ($16 a month) for around $30,000 worth of property coverage and $100,000 worth of liability coverage

What it Covers

In return for your payments, it will repair or replace your personal property that is damaged, destroyed or stolen as the result of 17 types of peril -- fire or lightning, windstorm or hail, explosions, smoke, vandalism, theft, damage by glass, electrical surge damage, and water-related damage from home utilities, to name a few. If your home is made unlivable by one of these perils, renter's insurance will pay for the associated expenses (cost of a temporary residence, meals eaten out, etc.). However, this coverage usually has a limit of about 30 percent of the total value of the policy.

In addition, renter's insurance will cover your liabilities as a renter. If someone is injured in your home, it will pay for that person's injuries. If this person sues you, it will pay for the court costs and pay for any damages that may be awarded as a result of the suit, up to a predetermined amount.

What it Costs

Your level of coverage depends on what you can afford to pay. Most policies offer at least $4,000 worth of property coverage, with the average being $30,000. Typical reimbursement values are $100 for lost cash; $2,500 for personal property used for business; $500 for valuable papers; and $500 for theft of jewelry, watches and furs. Renters that have items of particular value will need to pay an additional amount to purchase a separate rider to cover that item.

The cost of your coverage is your premium. As mentioned above, an average premium is about $200 per year. Where you live, your deductible, what your building is made of, the need for additional coverage and a variety of other factors can either raise or lower your premium. You may find that your insurance company offers discounts for protective devices such as burglar alarms and fire extinguishers that will help lower your premium.

How it Works

Before your insurance will begin to pay, you will be required to meet your deductible -- a specified amount you must pay before the insurance will kick in. The amount of your deductible is tied to the amount you pay for your insurance. The higher your deductible, the less expensive your insurance will be. Remember, though, that you need to be able to afford your deductible if you're counting on the insurance to pay for your remaining losses.

Your policy will reimburse you in one of two ways: "actual cash value" or "replacement cost coverage." Although you will pay about 15 percent more for it, you're usually better off with replacement cost coverage, which pays for what it actually costs to replace the items you lost. Actual cash value, on the other hand, pays only for what your property was worth at the time it was damaged or stolen. The only drawback of replacement cost coverage is that you are often required to pay for the damaged items first, and then submit your receipts for reimbursement. Keeping a complete inventory of your property, as well as receipts and photos or a video tape of your property in a secure place, will help streamline the reimbursement process.

Whether or not you think renter's insurance is a good investment, it is worth your consideration. It may save you from paying out hundreds and even thousands of dollars in the event that an unforeseen peril destroys your property and leaves you without a home. If you do find this to be a valuable investment, contact us for more information.