How Does Renters Insurance Work?

Fran
Fran Majidi
September 12, 2019

Whether you’re renting an apartment unit or live in a rented home or condo, you need to have renters insurance to cover your belongings in case they are damaged, vandalized or stolen. Think about all the things you own and how much it would cost to cover it all if your home was broken into. Or, what if there was a leak from upstairs and all your things got soaked?

People often wrongly assume that their belongings are covered by their landlord’s insurance, but that’s not the case. Also, most people are unaware that renters insurance protects them against lawsuits. Increasingly, apartment complexes are requiring renters insurance, but even when it’s not required, it’s wise to protect yourself with renters insurance.

Some common perils that are covered by renters insurance include fire, burglary, lawsuits for injuries on the premises, dog bites, items stolen out of a car, luggage lost at the airport, bus station or train station, if your clothes disappear at the dry cleaners, if you’re sued for slander, if you hurt a pedestrian while riding your bike and if your television gets destroyed due to wiring issues in the building or home.

When you buy your policy, you will get coverage up to one total limit on all your belongings and limits on individual items. There are categories for your belongings, such as electronics. If you know you will exceed the limit in any categories, consider buying a rider or floater so that you have extra coverage to get you reimbursed sufficiently. It may take some time and number-crunching to get the right balance on your policy, but it’s better than not getting paid out adequately for your losses.

You can choose between a replacement cost value policy and an actual cash value policy. The difference is this: with a replacement cost value renters insurance policy you will be reimbursed for what it would cost to replace the item today. Replacement cost value is more expensive but comes closer to what you paid for your item than a cash value policy which would pay out what the item is worth today, including depreciation (or loss of value due to wear-and-tear and other factors).

The way renters insurance works is simple. Never wait until a disaster happens to figure out what you need to recoup. Create a very detailed inventory of all your personal belongings and keep this document safe, possibly as a digital file or in cloud storage, so that it will survive a catastrophe. There are many inventory applications available to choose from, which make tracking items much simpler.

Avoid bloating numbers when you make an inventory. In fact, you’ll need to source items to verify the prices you listed. Keeping receipts (a toaster from Macy’s will be reimbursed differently than a toaster from Walmart), serial numbers and taking photographs helps. At the very least have URLs of similar items with pricing. If you keep valuables in the home, getting your expensive jewelry or antiques appraised is also helpful. Otherwise, your price may be in conflict with the insurance company’s estimate.

Remember that before coverage begins with a renters insurance claim, you must pay the agreed upon deductible.

It’s always wise to compare renters insurance quotes in your area by visiting here.

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