Renter's Insurance Explained

Renter's insurance can be confusing. There are a few things to consider before you purchase a policy. While having renter's insurance is a very good thing, not all policies are created equal and you should do your homework on the company as well as the particular policy before you sign on the dotted line. Here are some frequently asked questions and answers:

Why do I Need Renter’s Insurance?

If your property is lost, damaged, stolen or destroyed, will you have the finances to replace it? Your renter's insurance will compensate you in different ways depending on how your policy is set up. . The property owner is not responsible for your possessions, or any accidents that happen to your guests within your apartment or rental property. Rental insurance is your only protection. Some property owners require you to have a renter’s insurance policy in place before you can begin living in the property.

How do I get renters insurance?

Checking with local insurance agencies is the best bet. Renter’s insurance is widely available, but varies greatly by insurance company, so shop around for the best coverage.

What does my renter’s insurance cover?

In short, it depends on your policy and your insurance company. This is one criterion to help you choose which insurance company to choose. Choose one that offers the most coverage at the least amount of cost to you. Also, choose coverage that reflects the area you live in; if you’re in a flood prone area, flood insurance is a good idea and likewise, high crime rate areas would require more coverage in the face of theft.

How does my policy pay?

There are two ways: Cash value and replacement cost. Cash value will pay you what your item would be worth today, while replacement cost will give you the amount needed to purchase the item or similar item on today’s market. In addition, replacement cost will only give you cash if you replace the item.

What’s a deductible?

A deductible is the amount you have to pay before your insurance kicks in. Like health insurance, most renters' insurance policies have a deductible. The higher your deductible, the lower your insurance payments, but the more you’ll have to make up on your own in the event of theft or damage to your items.

What else does my insurance cover?

It also covers your liability. If someone comes to harm within your apartment or rental property, the property owner will not be responsible. You will have to cover their medical bills, as well as the court costs if they sue you. Your insurance will cover this. In addition, some policies will pay a stipend to cover living costs if you have to live somewhere else due to damage and some will pay for items lost while traveling. There are other add-ons that each company offers, but they differ greatly from company to company.