Take a good look around your home. If everything you own was destroyed by fire, water, or other catastrophe, would you be able to afford to replace it all? If you are renting the place you call home, renters insurance is the key to protecting your belongings and financial stability.
What is renters insurance?
Renters insurance is a type of personal property coverage, similar to homeowners insurance. However, unlike homeowners insurance, you don’t pay for any type of dwelling coverage — that’s on your landlord.
What does renters insurance cover?
- Personal property coverage will reimburse you for covered damage, loss, vandalism, or theft of your personal possessions up to a certain dollar amount.
- Renters insurance doesn’t just protect your belongings – it also protects you! If you cause damage to the place you are renting, or worse yet, cause a fire, your personal liability coverage could save you from a much greater financial responsibility than replacing your clothes and dishes. This coverage also extends to injuries caused by your pet.
- Renters insurance covers your additional living expenses if your home is destroyed by a disaster that your policy covers and you need to live elsewhere. This coverage is called loss of use, or additional living expense, and covers expenses such as hotel bills, temporary rentals, restaurant meals, laundry facilities, a storage unit, pet boarding, and more.
How much renters insurance do I need?
The amount of renters insurance coverage you need is unique to you. Your situation is different than anyone else’s, which means your insurance will be different as well.
You can determine how much coverage you need by completing a home inventory. If you are a victim of a fire or break-in, your inventory will help you know what needs to be replaced. There are a variety of smartphone apps available to help create and maintain your home inventory.
Renters insurance is flexible and can be modified to grow with you. If you move to a different location, you can keep your renters insurance – you simply need to inform your insurance agent and update your address on the policy. If you make new purchases, you can increase your personal property coverage at any time.
Is renters insurance expensive?
Renters insurance is very affordable, especially compared to homeowners insurance. The average annual cost of renters insurance is $187; much lower than the average annual cost of homeowners insurance at $1,083.
You may even qualify for discounts by insuring your car with the same company and for having certain safety and security features in your home, like a security system, dead bolt door locks, window locks, and more.
How does renters insurance work?
All renters insurance policies are meant to protect a renter. However, the way they protect the renter differs slightly depending on the type of renters insurance you choose: actual cost value or replacement cost value.
- Actual cost value (ACV) policies cover the value of an object after depreciation. For example, say your apartment was broken into and your two-year old television was stolen. With an ACV policy, your insurer would pay the depreciated value of the television. You wouldn’t be able to replace it fully, but you would still receive some monetary compensation.
- Replacement cost value (RCV) policies cover the cost of replacing an item with a new version of similar make and quality. Returning to our television example, with an RCV policy, your insurer would pay for the replacement cost of a new, similar television.
If you are renting or leasing the place you call home, ask your Leavitt Group insurance advisor to tell you more about renters insurance.
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