How to Find the Right Amount of Renters Insurance Coverage

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So you’ve made the decision to get renter’s insurance: congratulations! Now, how do you know what you need to get covered? The answer will certainly vary depending on your individual situation, but here are some general topics to consider when constructing your renter’s insurance policy.

Tip: When selecting an insurance plan, be aware that what’s specifically covered in your plan is all that you’re covered for. Even if your neighbor or friend has a policy with the same company, that doesn’t mean you’ll necessarily have the same coverage as your acquaintance. In order to get the right coverage, it’s important to know what you need. Above all, ask questions about the things you want covered in order to ensure that your policy will be tailored to your needs.

There are two main components to renter’s insurance: property insurance and liability insurance.

Property insurance covers your personal property in the case of certain destructive events, such as fire, flood, hurricane, or another natural disaster. Be aware, however, that property insurance only covers what your policy specifically describes. Some policies may cover fire or hurricanes, others may not. Make sure your policy is as comprehensive as possible, or at least verify that it covers the events to which your area is most susceptible. Realize that your landlord’s insurance covers the building in which you live, not your possessions, except possibly in cases where it can be proven that the landlord’s negligence caused the damage to your property. Never depend on your landlord’s insurance to cover any of your property. Renter’s insurance is reasonably priced, so if you have any possessions that would be extremely expensive to replace, or if the total value of your possessions is at all significant, seriously consider taking out a policy.

When estimating the value of your property, you need to consider the purchase price of the item and the time since you bought it. You can buy insurance that either will reimburse you for the actual cash value of your items (i.e., the depreciated value since the item was purchased), or the replacement value (what it would cost to buy the item new now). The second type of insurance is, obviously, a bit more expensive. Even if you don’t think your property is worth very much, it’s worth your while to make up a list of what it would cost you to replace everything if you were to lose all your possessions in a fire or other disaster. Your items may be worth more than you think, and getting property insurance could be more necessary than you had anticipated.

Liability insurance protects you against liability for any injury that may occur to individuals while they’re visiting or staying in your apartment. If someone were to fall and break a leg in your apartment, for example, you could end up paying some of those medical bills if a lawsuit were filed and you didn’t have liability insurance. If you’re covered by insurance, however, the insurance will help protect you against paying damages of this type. Liability insurance can be helpful in any situation, but especially for people who may have a lot of visitors to the apartment or may engage in any risky activity in the apartment. Keep in mind, though, that you can be liable for any freak accident that might happen in your apartment, so liability insurance is never a bad idea.

Once you decide how much property insurance and what kind of liability insurance you need, you should obtain estimates from different insurance companies regarding how much the type of insurance you want will cost. If you can verify you’re getting the same coverage from each company, you should be able to take the lowest estimate and rest assured that you’re getting comprehensive and affordable coverage. You’ll have peace of mind knowing that you’re able to replace your items no matter what may happen, and you’ll be able to rest easier in your appropriately insured apartment.

3 Responses to “How to Find the Right Amount of Renters Insurance Coverage”

  1. January 25, 2007 at 6:42 am, Guest said:

    Need your advise. My apartment has flooded 5 times in 8 months due to falty plumbing. I have not bought property insurance because after the first time, my property would not be covered by any insurance company. Also, after the first time of filing a claim, wouldn’t continued floods cancel my coverage? I need to move out but have been unable due to lack of funds, hospitalizations and death in family. What can I do?

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  2. February 09, 2008 at 6:42 pm, Guest said:

    When you go to purchase renter’s insurance, your carrier/agent very likely will run a CLUE report to see if there have been prior losses. If any are found, you will have a hard time getting coverage.
    Much of the time, other people’s losses are not held against you- however any sane insurer that sees 5 losses in 8 months will be reluctant to issue a policy for you.
    Please also be advised that “flooding” or seepage of water from the outside of the building to the inside is NOT covered by a renter’s insurance policy. If that’s what you are concerned with, you need flood insurance in addition to a renter’s policy. “Water Back Up” is only covered if you pay extra for a specific endorsement.

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  3. February 13, 2008 at 11:32 am, Guest said:

    Vernonia Oregon Renter. Well we hope to be able to get back into our rental house the first of the month, obviously we will definately need rental and flood insurance since we are having to replace everything. My husband would like to have the policy in effect shortly after we move in, but we can’t purchase anything yet as we have no place to put it. Do we just need to wait until we finish replacing everything before trying to get a policy or should we try to find a blanket policy that will cover a certain amount. We would like to have replacement costs covered as we won’t always be able to take out a loan to replace everything.

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