Many people are now looking to rent properties instead of buying them due to the increasing real estate prices and the strict lending requirements and procedures. Besides, renters have the advantage of not having to worry about regular maintenance, property taxes, repairs, and homeowner’s insurance. A renter can maintain their peace of mind regarding every aspect of the property, excluding their personal belongings, which landlords aren’t responsible for, even in case of property damage.
While these are all compelling reasons that may trick you into believing that you do not need renters’ insurance, it is wise to invest in an insurance policy. Even if your landlord has property insurance, renters’ insurance can provide you with even more protection. For instance, in case of damage or theft, your renters’ insurance can help you repair or replace your belongings. If you are planning to get renters’ insurance, here are the key factors you need to consider.
The Amount of Coverage
A renters insurance’s main aim, in case of a natural disaster, theft, or property damage, is to protect your belongings. On average, the value of a standard renter’s belongings is above $35K. However, this doesn’t necessarily mean that this is the amount of coverage you’ll need, as it depends on a variety of other factors. Selecting the right amount of coverage is a process that requires thorough consideration. To make sure that you don’t end up investing in a policy that doesn’t cover your needs, you should create a full inventory of everything you own. Make a list of your belongings, and write down the date when each item was purchased, how much you purchased it for, and what its approximate current value is. This will help you get a better understanding of your coverage needs. Your personal belongings are not the only thing that should be covered by your renters’ insurance. It should also cover liability protection in case someone gets injured or has their possessions damaged on your property. Typically, the limit can lie anywhere between $100K and $500K.
Understand What Isn’t Covered
Like any other insurance policy, renters’ insurance provides coverage for a variety of situations and leaves out others. For example, some policies don’t cover damages caused by natural disasters like floods or earthquakes. This is something that you should discuss with your insurance company, or see the website to get more information about the coverage they offer, as the policies differ from one insurer to another. To get the best plan, you need to understand your needs and consider several options before making a decision. For example, if you live in an area that is susceptible to floods, you will need to search for an insurer that provides coverage for these types of disasters. Some insurance companies offer separate policies for additional coverage. Create a list of your priorities and compare the policies of different insurance companies before making your final decision.
Coverage Types
There are two main types of coverage: Replacement Value policy and Actual Cash Value policy. When selecting an insurance company, you should first determine which type of coverage you want. Replacement Value policies are advantageous because when determining your damaged property’s value, they don’t take the depreciation of their value into account. Instead, they will pay you the amount you need to purchase a similar item at the current market rate or value. An Actual Cash Value policy, on the other hand, considers factors such as depreciation and daily use to determine how much your damaged property is worth. While a Replacement Value policy costs more than an Actual Cash Value policy, it is worth considering if you own essential or valuable items that you can’t live without.
Bundling
You may be concerned about the costs of renters’ insurance, especially if you’re already paying for other policies like health insurance or car insurance. In that case, you should consider bundling your policies. This will save you a lot of money while still providing you with the amount of coverage you need. Before you explore your renters’ insurance options, you should find out whether your car insurer offers renters’ insurance, and what their benefits are. This could save you around 10% to 20% of the cost of getting separate policies.
Higher Deductible
You usually need to pay a certain amount of money out-of-pocket before your insurance company provides you with coverage; this amount of money is called a deductible. Typically, this amount can range anywhere between $100 and $1K. While you might think that the lower the deductible, the more money you’ll save, you should actually opt for a higher deductible. Even though you will pay more money in case of an incident, you’ll pay lower monthly premiums by opting for a high deductible.
The amount of money you’ll save on the premiums will be enough to balance the amount that you’ll pay in case of an accident. Besides, it’s not likely that you will suffer from regular accidents, so this deductible will not be a recurring expense – hopefully! In any case, it’s a good idea to keep an emergency fund on the side in case you ever need to pay a deductible.
You Can Afford It
Many renters don’t even consider renters’ insurance because they think that they can’t afford it. However, renters insurance is relatively affordable; commissioners suggest that it can cost you around $15 to $30 each month. This amount of money, along with the deductible, is still much less than what you’d have to pay to get your possessions fixed or replaced in case of damage, not to mention the small fortune you will have to pay if one of your visitors got injured on your property.
If you think that your landlord’s property insurance is enough protection, think about all the belongings you’ll have to replace or fix in case of damage. Renters insurance can come quite in handy in various situations, and it can save you a small fortune during unexpected disasters. There are several policies, coverage types, and amounts of coverage that you can choose from. Make sure you compare your options and keep the above tips in mind to choose the best policy that fits your needs.
