Rental living is on the rise in America. But a recent survey found that only 34% of American renters have renter’s insurance! (InsuranceQuotes.com)
Consider all the valuables you keep in your home: furniture, computers, clothes, DVDs, and heirlooms. When you take an inventory of all the precious belongings you’ve accumulated, it’s easy to realize how difficult it would be to replace them without significant financial hardship.
Let’s explore the different ways that renter’s insurance can work for you.
How Does it Work?
Renter’s insurance covers both property loss and liability.
Property Protection. Renter’s insurance covers your personal property against damage from theft, vandalism, fire, smoke, lightning, and water damage (flooding excluded). It can even extend beyond your home, covering possessions that are damaged or stolen from your vehicle.
Liability Coverage. Renter’s insurance also covers your liability in the event that injury to others occurs on your premises. This means that if a friend trips down your stairs and gets hurt, your renter’s policy will take care of it.
Liability can also cover your legal defense costs and judgments in a lawsuit, whether the injury occurred at your residence, or elsewhere.
What About Expensive Jewelry & Equipment?
Expensive jewelry, collectibles, or specialized equipment can be protected by including an endorsement to your renter’s policy. An endorsement is added to your policy’s provisions. Essentially, this means that in the event of a covered loss, your policy carries the amount necessary to cover the repair, replacement, or cash reimbursement of the valuable item.
There are two different options to choose from for personal property coverage: actual cash value or replacement cost value. We strongly recommended that you opt for replacement cost value and here’s why:
Let’s say you bought a beautiful new armoire several years ago for $700 and it’s appraisal worth is only about $150 today. However, the cost of replacing this item today actually costs $900. If you opted for the actual cash value policy, you would only get reimbursed for the depreciated cost (minus deductible). But, if you have a replacement cost policy for your armoire, you would receive the full replacement cost (minus deductible).
Typically, your purchased belongings will actually lose value over time. This is why it is so important to have a replacement cost value policy so that you can replace your depreciated belongings at today’s prices.
Is Renter’s Insurance Affordable?
Renter’s insurance tends to be quite affordable because you’re insuring the value of your belongings and not the value of the building itself. This means that your monthly premium may only cost about as much as a movie ticket!
Renter’s insurance is not only a smart investment, it can also give you piece of mind and a feeling of ownership in your rental residence.
Do I Really Need It?
Chances are, your landlord’s coverage only covers structural damage to the building itself. This means that if your apartment building catches fire, the building may be repaired under your landlord’s policy but your belongings won’t be reimbursed or replaced. Renter’s insurance is the only way to protect your personal property in a rental residence.