Many types of insurance are required by law.
The most obvious example is car insurance. And most people only think about insurance when they are buying a new car or home because the bank requires it.
However, if you don’t own your a home or condo the most important insurance may be renter’s insurance.
And yet, more than 57% of tenants don’t have renter’s insurance according to Kiplinger.
Why get renters insurance?
Many people assume that their landlord’s policy on the rental property will cover their losses in the event of a fire or natural disaster.
Unfortunately, this isn’t the case.
For example, if there’s a leaky ceiling as a result of a storm, the ceiling damage WILL be covered — but not the potential loss to your property ruined by water damage.
In other words, the structure will be covered but not YOUR contents.
Replacing damaged items can cost a renter thousands of dollars. And consider how much it may cost to relocate or find temporary housing if you can’t live in your apartment while it is being fixed.
A good renter’s insurance policy will generally costs between $150 and $300 per year, depending on where you live.
And a typical policy will cover you from losses due to:
- fire or smoke
- storms and water damage (but not floods)
If you live in a flood zone, this insurance may be obtained separately.
Temporary housing will usually be covered as well.
Additionally, most policies cover liability should someone get injured in your home. For example, your renter’s policy will help cover legal costs if your Aunt Nancy takes you to court for slipping on the icy sidewalk outside of your apartment.
Many times renters assume that the landlord is responsible for all outside maintenance, including removal of snow and ice.
However, you may be surprised to find out that some leases may require the tenant to remove snow and ice, putting the onus on the renter if a lawsuit results from improper maintenance.
To figure out how much insurance you need, begin with a home inventory of your belongings.
It is important to understand the difference between a replacement cost value policy and a cash-value policy. A replacement cost value policy will replace your possessions (up to the limit of the policy value) and a cash value policy will only give you what the items were worth at the time of loss.
What does that mean in real dollars and cents?
If you have owned that DVD player for 5 years, you will be given the value of 5-year-old DVD player.
It generally makes sense to pay an additional 10% for a replacement cost policy.
When you complete your inventory, take photos and include original receipts if you have them. And remember to store this information at another location, like your office or in your bank deposit box.
Consider what your deductible will cost.
This is the amount you will pay out of pocket before the insurance kicks in.
Recently, a friend told me she had opted for renter’s insurance but chose a higher deductible of $1,000. Shortly after obtaining the policy her bike was stolen. Her bike was worth about $500. If she had paid about $10 more per month she could have chosen a $250 deductible and it would have been easier financially to replace her bike.
The company that handles your car insurance may be the best place to start when getting a quote and more detailed information. Discounts are usually given to customers who have multiple policies with one company.
Or, you can…
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Or you can search through our list of renters insurance providers for your State or Metro area that can help you get the insurance coverage you need.
Either way the choice is yours…