Many people are forced to rent an apartment until they are in a position to purchase a home of their own. Since the property doesn’t belong to them, there’s nothing to worry about. After all, the landlord is responsible for everything, right? Wrong! This is when renter’s insurance comes in handy. But what is renter’s insurance and is it worth it? Actually, it is.
When you rent an apartment, the owner of the building is required to carry insurance on the structure only- not it’s contents. That means your contents. In order for your possessions to be protected, you have to make the necessary arrangements.
Renter’s insurance is designed to cover the contents of a dwelling that you are temporarily residing in. This goes for all of your belongings, no matter what they are and how much they are worth. The right coverage insures the owner against everything from fire and smoke, theft, hurricanes, tornadoes, and so on. Like homeowner policies, there is even additional coverage that a renter can get that protects them against very specific disasters such as flooding or earthquakes.
Another way that a renter’s policy covers you is through liability coverage. This type of coverage protects you in the event that someone else is injured while they are in your residence, even if you are found to be negligent.
Even if your apartment becomes unlivable for whatever the reason and you have to be displaced, renter’s insurance can help there, too. Depending on your level of coverage, it can help cover the cost to move and get set up in a new environment.
Another way that renter’s insurance resembles homeowner’s insurance is in the way that they reimburse you. There are two types of reimbursement possible for your belongings: replacement and cash value.
Replacement is the more expensive of the two coverages since it actually pays you what it would cost to replace your belongings with new ones- regardless of their age. Cash value pays you what your items are currently worth, taking into account age and depreciation. The type of coverage depends on your possessions, their age and their value.
Before you purchase a policy it is best to videotape everything that you own, including furniture, to give you an idea of everything that you have. This will also be an invaluable tool to use as evidence in the unfortunate event that you should have to file a claim.
Now, the question that all renters want to know: is renter’s insurance worth it? Yes, it is. Given the amount of protection that you receive, renter’s insurance is quite reasonable, even if you have significant possessions.
In order to justify it’s expense, take a look at all of your possessions and what it would cost to replace them. Now, take the annual cost of renter’s insurance and divide it into that total cost. This will give you the number of years that you would have to carry renter’s insurance in order to break even.