If you are at all familiar with homeowners insurance you pretty much know what you need to know about renters insurance. If you happen to be like a lot of us and tend to get even more confused with every new policy you read, please do not feel bad or alone. Renters insurance is an extremely competitive industry which means that there are hundreds of insurance companies who are offering so many thousands of different policies and variations that almost anyone could get confused.
Standard renters insurance policies are meant to cover the contents that are inside a rented property against various damages that can be caused by fire, theft or covered natural disasters. Renters insurance policies cover liability protection as well which covers injuries that visitors may incur while they are on the premises of the rented property. Liability cover is very important due to the fact that it protects you as the policy holder from any unexpected financial liabilities. Keep in mind that your renters insurance policy only covers specifically what is says it covers. There are usually a standard set of potential problems that a renters insurance policy covers including lightning, fire, smoke, windstorm, water damage and vandalism. A renters insurance policy may also cover reimbursing medical expenses of people who don’t live with you.
You can buy earthquake and flood insurance separate from standard renters insurance policies in geographical areas that are susceptible to these types of natural disasters. This is also true for windstorm coverage which can also be bought as a separate policy.
Two types of valuations are used for renters insurance to compensate for personal possessions including replacement cost and actual cash value. Actual cash value will reimburse you for the amount of the item’s depreciated value at the time of its loss. So for example a big screen TV that was purchased five years ago will be worth a lot less now than at the time of purchase.
A replacement cost policy will reimburse you for the item’s replacement cost. So in this case you would be reimbursed for the cost of a new big screen TV and not the depreciated value of the 5 year old one. This policy will of course be more expensive but can be worth it if you ever suffer a loss.
Whenever you buy new items, particularly if they are expensive items like electronics and jewelry, you should add them to your policy right away, or put the items on a separate rider policy if need be. You need to understand that if expensive items are not declared at the time of their loss, you will not be able to recover anything for those items. To be safe you need to have an inventory of personal items that is kept updated and include the serial number and value of each item. If possible, keep your inventory in a safe that is fire proof or outside of the house like at the bank in a safe deposit box.
Buying a renters insurance policy is a very important and sound investment. Get the protection you need today and don’t wait for something bad to happen.
