Renters Insurance 101
Renters insurance is a seriously cozy security blanket for your belongings -- plus, it helps cover your living expenses in case an emergency forces you to vacate your place temporarily. Keep reading to find out exactly what renters insurance is, who needs it, how it works, questions you should ask before signing on to a policy, how much it costs, and how to get -- and keep -- your costs down!
What It Is
A standard renters insurance policy is a "package" of four categories of insurance:
Personal property insurance protects your stuff: In the event of a burglary or damage, it helps you replace everything from furniture to electronics. Renters insurance can also protect your belongings even when they're temporarily outside of the home (say, a piece of furniture that's damaged while being delivered).
Liability coverage kicks in if some jerk gets hurt at your place and sues you, leaving you with medical and legal bills.
Living expense coverage will help with your expenses if you're forced out of your home. (Yes...room service!)
- Guest medical coverage pays the bills if someone is injured in your home.
Who Needs It
If you think your home is at high risk for, say, a burglary or fire, then it's a no-brainer; but frankly, this type of insurance is so cheap -- and so heartbreakingnot
to have if you wind up needing it -- that we recommend it for all renters.
How It Works
Your landlord's insurance policy probably only covers the physical structure of your apartment, so don't assume you're fine if they've got one. The benefit limit on a renters insurance policy is usually a set amount based on square footage, the value of your stuff, and a general idea of your lifestyle. You can also add scheduled personal property coverage -- a policy extension that covers particular items.
Questions to Ask
- Can you add on flood or earthquake coverage?
- Is the coverage limit enough to replace fancy things, like furs, jewels, and electronics?
- How much is the deductible (the amount you have to pay before insurance will start reimbursing you)?
- Do you need a separate policy if you work from home?
- How should you inventory your items to prove they existed if something happens?
- How will you be reimbursed for claims -- will you get the item's current value or the replacement cost?
- Does the policy cover your new place if you move, or will you need to set up a new plan when your lease is up?
- Does the policy protect your stuff when it's in your car, on your body, or at work?
The premiums for renters insurance average between $15 and $30 per month, depending on the location and size of the rental unit and the policyholder's possessions.
How to Get Costs Down
Install smoke detectors, fire alarms, dead bolts, and other protective devices -- your landlord should chip in. Ask one of your current insurance providers (say, your car insurance company) to give you a quote for other policies you're looking into. Bundling policies can save you up to 15 percent.
Interested in other types of insurance policies? Head over to our money section!