Whether it’s a busted pipe that floods your apartment, smoke damage from a neighbor’s kitchen fire or a broken window caused by a windstorm, renter’s insurance can mitigate your risk of losing valuable possessions due to events outside your control.
Renters insurance is a smart and surprisingly affordable way to protect your belongings when the unexpected happens, but there’s no one-size-fits-all policy. To determine the policy that best fits your material life, consider the following tips.
Take Time to Comprehend the Contract
Although a renters insurance policy might be a dull read, it’s important to sift through the entire policy and understand it completely before signing off.
“When you have a renters policy, an insurer typically pays for damage to your personal property, the cost of staying elsewhere if your place is inhabitable (say, from smoke damage), and accidents for which you might be legally liable—for example, if a visitor gets hurt or has property damaged at your place and sues,” explains ConsumerReports.org writer Barbara Kiviat. “Make sure any policy you buy covers all three.”
For greater liability protection, Nerdwallet.com writer Juan Castillo recommends investing in “umbrella insurance, which gives you an additional layer of liability coverage above the limits of renters insurance.”
Kiviat also recommends paying special attention to the “perils” covered in the policy. According to Kiviat, you’ll be covered by most policies if your belongings are impacted by vandalism, smoke, riots, explosions, fire, hail and theft, but damage incurred due to floods and earthquakes typically require additional, distinct insurance policies.
Let Circumstances Dictate Choice
Although renters insurance is considered an overall affordable expense because of the protection it provides, your budget still might be less than accommodating. If your budget is rigid, Castillo recommends you “consider increasing your deductible. But first ask yourself: ‘How much can you pay out of pocket in the event of a damage claim?’”
Your dwelling would not be a home without your furry best friend, and although a dog is usually a source of unconditional love, sometimes your precious Fido can exhibit Cujo-like behavior.
“A lawsuit against you over a dog bite could ruin your finances for years. If you want coverage for this, make sure dog bites are covered by the liability portion of your renters insurance policy,” advises Castillo.
The philosophy of “what’s mine is yours” is an amiable way to live with a roommate, but it probably shouldn’t extend to insurance matters.
“Before you sign a policy, have a frank discussion with your roommate about how to share insurance payments—especially if your roommate has a lot of stuff that could drive up the cost of the quote. Be sure you agree, too, on the type of renters insurance coverage you’ll get,” advises Castillo.
Do the Math
Since most items lose value over time, it’s important to understand the difference between cost and value.
“Policies cover either the replacement cost of property or its actual value. The latter takes into account that older items may have lost value over time. You might save on your premium by opting for actual-value coverage, but it’s usually well worth the price to go with a policy that covers replacement cost, because that’s what you’ll have to pay to buy new things,” explains Kiviat. She also notes that you can purchase additional coverage if you posses high-ticket items that your policy won’t provide full replacement cost for.
Renters insurance is a must-have budget item, and with solid research and a thorough assessment of your belongings and lifestyle needs, you will be able to buy the right renters insurance policy.
