Renters Insurance
If you rent an apartment you need insurance to protect your belongings. While your landlord might have insurance, it only protects the building. Your belongings are not covered under the landlord’s policies.
There are several types of residential insurance policies and lots of information available on the Internet to help you get instant free quotes on what renters insurance may cost you.
In the insurance industry, the HO-4 policy is designed for renters and covers losses to your personal property from 17 types of perils:
- Fire or lightning
- Windstorm or hail
- Explosion
- Riot or civil commotion
- Aircraft
- Vehicles
- Smoke
- Vandalism or malicious mischief
- Theft
- Damage by glass or safety-glazing material that is part of a building
- Volcanic eruption
- Falling objects
Weight of ice, snow, or sleet
- Water-related damage from home utilities
- Electrical surge damage.
Floods and earthquakes aren't on the list. If you live in an area prone to either, you will to decide if you want to buy a separate policy or a rider. In some coastal regions, where hurricanes might pose a threat, you might also need to buy a separate rider to cover wind damage.
Actual Cost Value vs. Replacement Cost Coverage
One thing to look at is whether the insurance company will offer "actual cash value" (ACV) or "replacement cost coverage" for your belongings. As the name implies, ACV coverage will pay only for what your property was worth at the time it was damaged or stolen. So, if you bought a television five years ago for $300, it would be worth significantly less today. While you'd still need to spend about $300 for a new TV, your insurance company will pay only for what the old one was worth, minus your deductible.
Replacement cost coverage, on the other hand, will pay what it actually costs to replace the items you lost.
Roommates
Renter's insurance and other homeowners insurance policies are designed for single individuals and traditional families. So when unrelated individuals share a residence, insurance coverage can become complicated. However, some insurance companies will allow multiple roommates to be listed on a single renters insurance policy. Insurance laws on this topic vary from state to state, and insurance policies vary from one company to the next. However, most insurance companies recommend that each tenant maintain a separate renters insurance policy to cover his or her personal property. You should each create an inventory of your possessions, so there are no questions about which policy covers which items if you ever have to file a claim.
Lowering Costs
Just like any other type of homeowners insurance policy, your premium for renters insurance depends on a number of factors: where you live, your deductible, your insurance company, and whether you need any additional coverage. There are some ways you can lower your renters insurance cost:
- Increasing your deductible (the amount you pay before your coverage kicks in) is one strategy.
- Most insurers offer a discount for protective devices such as smoke and fire detectors, burglar alarms, and fire extinguishers.
- Some insurers might offer discounts to policyholders who are over age 55 and retired.
Renter’s insurance can be costly, but it is necessary. The premiums charged for renter’s insurance vary widely from company to company, so it pays to take the time to do research and make an effort to find the best value for your insurance dollar.
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