Most people’s personal belongings cost more than they think, which makes renters insurance worth considering. It also covers your liability in case someone gets hurt at your home and can help pay for temporary living expenses if the property is uninhabitable due to covered damage.
Complete an inventory of your possessions and their values to determine how much personal property coverage you need. You can often upgrade to replacement cost coverage, which pays out at today’s prices rather than actual cash value.
Liability Coverage
Most renters insurance policies offer liability coverage, which can pay for medical bills and legal fees if someone is injured on your property. This protection typically costs about $14 per month.
Personal property coverage reimburses you for the cost to replace your belongings up to a certain dollar amount, but it’s usually best to go with replacement cost rather than actual cash value because this will ensure you’re paid out at today’s prices if you need to file a claim. Completing a home inventory can help you decide how much personal property coverage you need. Several mobile apps are available that can scan your possessions for you to make the process easier.
The amount of liability coverage you select directly affects your premium. You should choose an amount that’s close to the total value of your assets, including your savings and retirement accounts. Raising the amount of liability coverage can significantly reduce your premium, but it’s important to make sure you’re not paying for more protection than you need.
Personal Property Coverage
The personal property portion of a renters policy reimburses you for the cost to replace your belongings that are stolen or destroyed. It’s important to estimate how much your possessions are worth before choosing a coverage limit. You can do this by completing a home inventory, which lists your possessions, their purchase or current value and any other identifying information. Many insurers offer apps to help you catalog your belongings and estimate their value.
You can usually lower your premium by increasing your deductible, which is the amount you pay toward a claim before the insurance company covers the rest. However, make sure you choose a deductible you can afford to pay in the event of a claim.
You can also reduce your premium by opting for actual cash value rather than replacement cost coverage. However, if you opt for ACV, your insurance policy will only reimburse you up to a certain amount for damaged or stolen items.
Additional Living Expenses Coverage
If your home is damaged in a covered event, you may need to relocate while it’s being repaired. Additional living expenses (ALE) coverage can pay for hotel bills and other costs while you’re away from home. This type of coverage is usually bundled with loss of use and can help cover up to 24 months worth of expenses.
A good way to estimate how much ALE you might need is by doing a home inventory and taking note of the price of your belongings. Your insurance agent or company can also provide guidelines for calculating this amount.
The deductible you choose will impact your rate, as it’s the amount you’ll be required to pay out of pocket before the insurance company begins covering costs for claims. It’s usually cheaper to opt for a higher deductible, but be sure it’s an amount you can comfortably afford in the event of a claim. Location can also impact your renters insurance rate.
Additional Coverage Options
Taking advantage of discounts and bundling your policy can make a significant difference in how much you pay for renters insurance. A licensed agent can help you select the coverage options that best match your needs and budget.
Most renters have more belongings than they realize, which is why doing a thorough inventory of your personal property is essential to determine how much renters insurance you need. You can also consider adding additional coverage to your policy for specific items, such as jewelry or valuable collections.
Another factor that can impact the cost of renters insurance is choosing a deductible amount. This is the amount you are responsible for paying before your insurer issues a claims check. The higher the deductible, the lower your premium, but be sure it is an amount you are comfortable with paying in the event of a claim. You can also choose to include liability coverage, which protects you in the event that someone is injured at your home.
