How much insurance should I buy?
Make sure you have enough insurance to replace all of your personal possessions in the event of a burglary, fire or other covered disaster.The easiest way to determine the value of all your personal possessions—including furniture, clothing, electronics, appliances, kitchen utensils and even linens—is to create a home inventory. This is a detailed list of all of your personal possessions along with their estimated value. An up-to-date home inventory will also make filing an insurance claim faster and easier.
Should I get replacement cost or actual cash value coverage?
An actual cash value policy pays to replace your possessions minus a deduction for depreciation whereas a replacement cost policy will pay the cost of replacing your possessions without accounting for depreciation. The price of replacement cost coverage is about 10 percent more but can be well worth the extra expense as the value of most items tends to depreciate quickly.
What disasters are—and are not—covered?
Renters insurance covers you against losses from fire or smoke, lightning, vandalism, theft, explosion, windstorm and certain types of water damage (such as when the tenant upstairs leaves the water running in the bathtub and floods out your apartment or a burst pipe). Most renters insurance policies, however, do not cover floods. Flood coverage is available from the federal government’s National Flood Insurance Program. You can get this coverage from the same agent or company representative who sold you the renters insurance policy. Earthquakes are not covered either. You can either get a separate policy or have it added as an “endorsement” to your renters policy, depending on where you live.
What is my deductible, and how does it work?
A deductible is an amount of money you pay out-of-pocket before the insurance coverage kicks in. Deductibles are available as a specified dollar amount, typically $500, $1000 or $2000, though higher deductibles are available. The larger the deductible, the lower the premium charged for the same amount of coverage, so if you can afford a deductible of at least $1,000, you may get as much as 25 percent off your premium. Remember though, that you will be responsible for paying the deductible each time you file a claim.
Do I have enough liability insurance in the event someone sues me?
Renters insurance provides liability protection that covers you against lawsuits for bodily injury or property damage done by you, your family members and even your pets. This coverage pays for both the cost of defending you in court and court awards—up to the limit of your policy. Most standard renters insurance policies will generally provide at least $100,000 of liability coverage, but additional amounts are available. Consider whether the amount of liability coverage provided by your policy is sufficient to protect your assets.
Did you know you also have no-fault medical coverage as part of the liability protection provided by your renters policy? This coverage is only for injuries sustained by others and is not a substitute for your own health insurance. Medical payments coverage allows someone who gets injured on your property to simply submit his or her medical bills directly to your insurance company so the bills can be paid without resorting to a lawsuit. Most policies include about $1,000 to $5,000 worth of this coverage.