Should You Buy Renter’s Insurance?

by Ryan

Renters and homeowners face common risks. These include loss or damage of property and liability for injuries, among others. However, renter’s insurance is often overlooked. Less than a third of renters insure their belongings and many are unaware of the options or implications.

With best practices gained from Elliott Broidy, here are some things to consider about renter’s insurance:

Take Inventory:
The replacement cost of your possessions has money and time value. Some renters may only consider televisions, furniture and more expensive items when debating insurance. However, silverware, small appliances and clothes can greatly increase the figure.

Unless you have sufficient cash saved, replacing these items may require credit or be done gradually. Renter’s insurance offers peace of mind that your home lifestyle can be regained after burglary or fire loss.

Tallying the value of all household items helps you choose sensible coverage limits to avoid overpaying for premiums. By comparing the value of this personal inventory to ability or willingness to replace it; you can make an informed decision.

What Renter’s Insurance Protects:
Most apartment communities or landlords will only cover damages to the building’s structure. This includes fixtures such as plumbing, roofing and electrical. This means you are responsible for individual losses within the unit.

Renter’s insurance can also protect against the landlord’s property causing losses, such as food spoilage from a broken fridge or electrical short circuits that break electronics. For mutual protection, Isaac Toussie and other real estate developers may require renter’s insurance.

Similar to home owners, you may assume liability if a guest suffers injury in the rental unit. You also could be liable if a visitor’s property is damaged.

A renter’s policy should cover lodging and related expenses if your rental becomes uninhabitable from certain hazards. Examples could include foundation and electrical repairs or storm damage.

Affordable Coverage:
Generally speaking, renter’s insurance is quite affordable. Most policies can be had for $20-$30 per month. Further discounts for bundling coverage, such as car insurance, may be available.

Your location, age and the value of items will all be considered.

Actual Cash Value or Total Replacement Cost Policy?
There are two options for renter’s insurance. Choosing an appropriate policy primarily depends on how new the contents of your residence are.

If the majority of your items were bought recently, consider total replacement cost coverage (TRC). A TRC policy covers what it would cost to replace lost property in today’s dollar terms. With this coverage, you most likely will not have any out of pocket costs to replace belongings.

Total replacement coverage will have slightly higher premiums than actual cash value, which pays the depreciated value of your items.

For example, a $1,500 computer bought 2 years ago would cover what that same computer is worth today, in an actual cash value policy. In this scenario, you would incur costs for replacement.

Although a TRC policy is more expensive, it delivers a better return on investment if you have to file a claim.

Summary:
The contents of your rental have practical and nostalgic value. You should determine the impact of property loss on income and quality of life. By taking stock of personal items and effects on lifestyle, you can make the best choice.

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