It Pays To Have Renter's Insurance

A fire has broken out in your apartment. The house is flooded or has been burglarized. Who’s going to pay for the loss of and damage to your personal property? If you don’t carry renter’s insurance, you could be starting from scratch when you can least afford it.

Many people don’t even consider renter’s insurance, but it certainly pays to have it.

The coverage you need depends on what your belongings are worth. The average person owns more than $20,000 worth of property, according to State Farm Insurance. Items such as furniture, electronics, computers, clothing, appliances, paintings, sports equipment, and jewelry should be insured in case of loss.

Take inventory of your possessions. Record the make, model, serial number, age, and cost of items (both purchase and current replacement). Have valuable items such as artwork or jewelry appraised. Photograph all items. Total the amounts of these items to estimate their worth. Then put this inventory in a safe place—such as a bank safe deposit box.

Valuable items such as antiques, jewelry, furs, and certain medical devices are not completely covered under a basic policy. To insure these, a separate policy called a floater should be added.

Renter’s insurance is not that expensive, but it’s still a good idea to compare prices. Contact several insurance agencies or agents and compare.

If you have a roommate, offer to split the costs of insurance. Check into a single policy to cover all inhabitants and possessions in the apartment.

Weigh replacement cost versus actual value. Replacement cost coverage is more expensive but will reimburse you for the complete current cost of buying new items. Actual value insurance will pay your purchase price less depreciation.

Select a deductible that works for you. A higher deductible (your out-of-pocket expense) means a lower premium. But first, balance your ability to cover the deductible with your monthly premium savings.

Basic renter’s insurance usually includes liability coverage in case someone is injured in your apartment. As with car insurance, this coverage has a per-incident limit, so keep that in mind when comparing policies.

Whether you’re renting for a short or long term, renter’s insurance is a simple, cost-effective way to prevent an unfortunate situation from becoming worse.

John Nardini is a Michigan-based financial counselor and a regular contributor to American Profile.

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