There are many types of renters insurance policies on the market to fit the needs of the renting community. Some tenants don’t own much, and a huge policy would be a waste of money. However, other tenants own many things, located in multiple locations. Those tenants are willing to pay more to make sure they’re adequately protected. Which policy you should choose depends on how much you own, and how often guests come to your apartment.
Most tenants only need basic coverage for renters insurance. This type of coverage insures your belongings in the following cases:
- Natural disaster
- Theft and vandalism
- Falling objects
- Building collapse
- Water damage
If you suffer damages in any of these circumstances, you can file a claim and receive payments to replace those items according to its replacement value. In addition to protecting your personal belongings, a basic coverage plan includes personal liability for bodily injuries suffered by guests as well as property damage.
Some renters insurance policies will pay for temporary housing and living expenses if you’re not able to live in your apartment for a short time. For example, if your apartment is destroyed by a fire, you’ll receive payments for temporary housing, storage if needed and reasonable living expenses to sustain you until you can get back on your feet. Protection for living expenses is offered as additional coverage, and you’ll have to pay extra premiums for it. You may decide to skip this coverage if you have other ways to deal with the same problem, such as three to six months worth of living expenses saved in an emergency fund. However, if you don’t have a lump sum of cash yet, it might make financial sense to add this to your policy until you can save up for a rainy day.
A basic renters insurance policy won’t cover certain natural disasters, like damages resulting from earthquakes. It also won’t cover some personal items, like cash, personal jewelry or food that gets spoiled. If you don’t think that a basic policy is sufficient to meet your needs, then a comprehensive renters insurance policy is for you. This will result in higher premium payments, but it may be worth paying more if you estimate the value of your items to exceed $25,000, or if you frequently have guests over and anticipate needing more in liability coverage.
Some renters insurance policies will only cover the items in the apartment. However, other policies offer “worldwide” or “global” coverage. That means your things in storage or located in another place off-site are covered as well. You don’t have to pay a higher price for this, but you have to find an insurance company that offers this as a part of their basic or comprehensive policies. Ask the agent if the renters insurance you’re considering offers worldwide coverage.
Find a reputable renters insurance company to cover you. The company needs to be financially healthy, or it may not be there to give you a payout when you need it.