Rental Insurance Basics: How Much Coverage is Enough?

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Apartment dwellers and other tenants looking to purchase renters insurance might be asking how to draw up the limits of the various premiums that insurance companies offer them. Knowing more about renter’s insurance will help the tenant figure out just how much will help them have peace of mind about their household possessions and their temporary home.

Renter’s Insurance: Types of Valuations

One thing renters will want to know about is ACV or Actual cash Value as opposed to RV or Replacement Value. These two different kinds of value can be applied to items on a renter’s insurance inventory list. Actual cash value will pay out according to what the item is worth on the market, and replacement value will pay according to the original value minus depreciation. One of these may be better for covering some of your household possessions that hold more value.

Arranging for Coverage

Generally speaking, renters will want to figure out just how much of their possessions they want covered. Covering everything, right down to the last spoon and fork, is likely to be an overly expensive and time-consuming option. Some financial experts say consumers should always purchase the least insurance possible, but others like to have a good amount of renters coverage for their most valuable possessions, so that they will not be left with a huge liability after an unfortunate event.

As a first step in arranging for coverage, the tenants should make a list of everything that they want covered, and give each item an estimated value. Totaling up the items will give the individual or household an idea of their total desired coverage amount.

Adding Extras

With the list of inventory in hand, the tenant can call up a reputable renter’s insurance company and talk to representatives about how to cover as much of the list as possible, while adding any necessary extras.

One extra coverage that renters may need is liability coverage. Liability coverage covers instances where people may be injured on a rental property or in a rental housing space. For renters who have outdoor attractions or other liabilities in their rental property or space, liability coverage can be a good option to save them from the costs of potential lawsuits.

Renters will also want to look at the specific range of events that their policy covers. While most policies cover issues like theft and water damage, many of them do not cover earthquake, fire and flood, and if the renter lives in an accident-prone area, they may need additional insurance riders.

The policyholder may also need additional insurance riders for single items that are very expensive. Some experts suggest that rather than adding pieces of jewelry or other valuables to a policy, it can be more effective to cover them individually with specialized insurance products.

Other Options

Those who are having a hard time getting affordable coverage can select a deductible for their renter’s insurance. A deductible is an amount that the policy holder will have to pay before coverage kicks in, but it does bring down premium payments.

Another option for those with large assets is an umbrella policy. An umbrella policy can combine individual insurances like auto, renter’s homeowner’s, and other coverages into one great big policy, where some savings can apply.

Think about all of these considerations for selecting the right customized renter’s insurance policy.


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