Choosing Renter’s Insurance

Renter’s insurance helps in the event you need to replace your belongings in case of a storm, other natural disaster, theft or fire. Here’s a quick primer on a purchase every renter should make:

HOW TO GET IT

Polls have shown that more than 60% of responders had not taken advantage of renter’s insurance, putting everything they own at risk. If the worst happened, they’d have to foot the bill when it came to replacing personal items. Insurance premiums often vary from state to state, but quotes are readily available either online or through a local insurance agent.

WHAT IT COVERS

As with cost, what’s covered by a renter’s insurance policy varies. So, closely read any prospective agreement to ensure that it covers exactly what’s needed. A typical HO-4 policy will protect against fire and lightning, windstorm or hail, smoke damage, theft and vandalism. Many policies have exclusions for earthquakes or floods — and that may be a key concern,

depending on where you live. Typically, there are policy add-ons to address these exclusions, but with an additional fee. Some policies also do not cover more costly belongings, like original art or jewelry.

WHY IT’S IMPORTANT

Hurricanes, fires and floods get all of the headlines, but that’s actually not the biggest danger for renters. Instead, they suffer far higher rates of theft and burglary than typical home owners, according to the National Apartment Association. Renter’s insurance serves as your backstop, should someone break in. These policies can also protect you financially if someone gets hurt in your unit, covering liability expenses.

TYPES OF COVERAGE

Insurance companies usually offer two different reimbursement choices for lost belongings. “Replacement cost” policies are more expensive, but they pay the

just-purchased price of something like a stolen living-room recliner — meaning the reimbursement will reflect the cost of a typical item of the same value. “Actual cash” policies, on the other hand, appraise your belongings by what they are valued at the time of the loss, a much-lower level. That same recliner will be depreciated by the number of years you’ve owned it.