Why You Can’t Afford To Live Without Renter’s Insurance

Do you rent an apartment or home? Do you have renter’s insurance? You probably should!

That's because your landlord may have insurance, but it only protects the building structure and the property around it, not your personal items.

Imagine how much it could cost you if you lost all your furniture, clothes and other belongings in a fire or other disaster – or if it was stolen. Renters insurance, like homeowners insurance for people who own their home, covers you if a fire or natural disaster happens at your apartment building, complex or home. It also covers items stolen in a robbery.

It's likely that you can to cover all your belongings with a renter’s policy for less than $200 a year. When you think about the value of your computer, audio and video equipment, clothes, sports equipment, furniture and other personal items, it's money well-spent.

Did you know: You can purchase a renter’s policy on its own or bundled with your auto coverage? Your premium will likely be less expensive if you bundle.

There are three key things you need to know about renter's coverage before you purchase it:

1. Similar to automobile collision and comprehensive coverage, your renter's policy will come with a deductible. The higher the deductible — the amount you'll have to pay out-of-pocket if something happens to your apartment — the lower the cost of insurance. The inverse is also true: the lower the deductible, the higher the cost of insurance.

Select a deductible level that you feel confident you can afford if an emergency happens. Always keep that amount of money in the bank so you're prepared for the unexpected.

2. Renter's policies can cover your possessions for actual cash value or for replacement cost.

Actual cash value coverage is generally cheaper, but it will only pay what your property is worth at the time it's damaged or stolen.

Example: If you bought a television five years ago for $500, it would be worth significantly less today. While you'd still need to spend about $500 or more for a new one, your insurance company will pay only for what the old one is worth, minus your deductible.

Replacement cost coverage is generally more expensive, but it will will pay what it actually costs to replace the items you lose (minus the deductible). In the example above, that would be $500 or more for a replacement television. In this case, a higher premium might be worth it in the long run.

You’ll likely find that your renters insurance policy comes with specific dollar limits on certain items. If you own items that are worth more than what is covered by your policy — for example an expensive bicycle or electronics equipment — you’ll need to purchase additional coverage for them.

Most renter's policies will also cover you for property-damage-related and bodily-injury lawsuits. That means if someone in your unit slips and falls and sues you, you're covered up to your policy limits. The insurance company will also pay for your legal defense.

In addition, if you can't live in your apartment because of a fire, burst pipes or any other reason covered by your policy, your renters insurance will likely pay for you to live somewhere else while your unit is being repaired.

You can see that you can get a lot of protection for very little money with renter's insurance. It's an worth purchasing on its own or adding on to your auto policy if you live in a rental unit. Having it will help you sleep better at night.