Protect Your Stuff When You Rent

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Insurance isn’t something you think about when you’re renting a home, apartment or a college dorm but it should be.


If you’re like many people, you’re thinking that renters insurance is a waste of money.


However, there are ways to think about renters insurance that makes things more  productive. 

If your belongings have value and they’re damaged or you're robbed, you’re apt to pay more to replace them than you would pay in the monthly insurance.


This is where you have to make intelligent decisions based on the plethora of information I’m providing in this ultimate guide to renters insurance.

What is Renters Insurance?

Renters insurance is coverage that comes in three choices.

In a nutshell it covers your belongings, your living situation and others in terms of liability.  


Liability is typically what throws people off.


It’s simple.


If you rent an apartment or house, and you have a visitor that hurts themselves at your place that decides to file a lawsuit you’re covered.  

Just keep in mind that you’re covered only up to the amount your policy allows. 


This is important to know when choosing a deductible. 


Yes, it’s a lot more than just an insurance policy that may replace your belongings in case of theft. 

Read on!

How Renters Insurance Works

Renters insurance will cover for any loss, damage or liability up to the amount that your plan covers.


The amount of compensation you receive will also depend on the deductible and type of plan. 

Actual Cash Value

This is the naturally depreciated value of the items. You’ll have to make an educated choice with this.


One way to help yourself do that is to get your belongings appraised. Typically, appraisals are done with high-ticket items like jewelry.


You can still look on Ebay and other bidding sites that can show you what the cash value is and if the items will rise in value or fall in value. 

Let’s look at an example. If you have gold jewelry that you keep in the house, then gold may appreciate enough over time so the cash value may get a decent cash-value back.


Designer clothing depreciates to a point when you wear it and wash or dry clean it but you may get market value if it’s high-fashion. In other words, you could get paid just for the name.


I’m not a jewelry or fashion expert, these are only examples. I want you to understand the concept so that when you actually purchase renters insurance you are choosing it logically.

What Does Renters Insurance Cover?

Umbrella Policy

One thing that’s for sure is that renters insurance is not as cut and dried as homeowners insurance. You don’t own the property you are on and that causes grey areas when something happens in terms of liability. 


As I stressed before, renters insurance is more than just protection for your personal belongings. 


Let me explain in a simplified way and start with the grey areas. If a guest of yours hurts themselves in your living space you will make a claim on your renters insurance. However, there are stipulations involved in your unique policy.

You must assess several elements:

Who is legally at fault?

This may take some research. Ask the insurance agent you are working with how to find out who is legally at fault when something happens, how to report it and to who.


Why? Because you need documented proof of the incident. Better for you to know as many details about the who and the how from your agent prior to choosing a policy.


This is why I recommend speaking with a live agent and not relying on the online process for any insurance.


There’s just some answers you won’t get in a complete enough form. You also don’t have any recourse.

Where was the incident on the property?

This is a consideration. For example, if they trip going out the door on your welcome mat who pays?


The building owner will have insurance, they have to but it’s not easy to get a clear bead on who pays when the incident started inside your apartment and ended outside.


This is just an example to represent many possible scenarios.


Either way, the fact remains that location needs to be addressed.

Circumstances of the incident

What circumstances surrounded the incident. The point is, every incident is unique.


You don’t have a crystal ball to determine what will happen in the future. The best you can do is get enough coverage based on a lifestyle you know you are apt to keep. In other words, are you a social person?


Are you a homebody that prefers to meet others outside the home? What’s the lifestyle of the people you live with?


Make the best educated guess and choose a policy that makes you comfortable. 

Alternative living arrangements are also  covered should the place you are in is damaged or uninhabitable.


Again, make sure you get what you need. If you are living somewhere where you are not able to stay with family or friends then this type of policy with enough coverage is recommended.


The type of issues that may arise to cause you to need this policy can be but are not limited to, a fire or storm damage.


So, what other, more mundane things does renters insurance pay for? 

  • Personal belongings meaning whatever you have in your residence.
  • Electronics such as stereos and appliances. In the case of appliances that an apartment came with like a refrigerator or stove, this may or may not be covered. Check with your insurance agent to find out what that stipulation is. This is what I meant by grey areas in renters insurance because there is the property owners domain and the renter’s.
  • Clothing and other personal items. This is self-explanatory. For example, you have a small fire from inside your own apartment and lose or damage your personal items. Your clothes, shoes and belongings may be covered. Again, remember that your claim amount depends on your policy amount. What do you own? What do you value? It’s up to you to decide and then choose the policy that you’re confident in.

What It Doesn't Cover?

First, you must understand that there is a short answer to what it doesn’t cover.


The items listed in the aforementioned coverage list will ONLY be covered if they’re in the realm of your policy.


If the total amount of your losses outweigh your policy limits the excess will not be covered.


So if you lost $5,000 worth of stuff and your policy covers $2000 you are going to be stuck for $3,000.


It also depends on what I stressed at the beginning of the guide when I addressed the cash value or replacement value option. 


There’s a rule of thumb to remember. 

If your items break due to wear and tear or are deliberately broken then rest assured they won’t be covered.


If they break, are damaged or lost due to vandalism, fire or theft then they may be covered depending on the cause of the issue. 


Also, if you move into a place with any kind of rodent or bug infestation including bed bugs, then it’s not going to be covered.


If you move into a place it’s best to make sure it’s treated for bugs and that you know where your bed has come from.


I personally would never accept a mattress as a furnishing. 


There can be a lot of things other than bed bugs in a mattress.

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How Much Does Renters Insurance Cost?

Low End RI

$100 Per Year

$500 Deductible

$12,000 Max Replacement Cost

$100,000 For Liability

Mid Range RI

$120 to $190 Range Per Year

$500 Deductible

$50,000 to $60,000 Coverage

$100,000 For Liability

High Range RI

$402 Per Year

$500 Deductible

$1000,000 Property Coverage

$300,000 to $1 Million Liability Range

I created a chart based on national averages according to Insurance.com. Now, let’s look at the breakdown so you get a better picture. 

Minimum Renters Insurance

The minimum renters insurance marked in the above chart is for those who have very few possessions.


This policy is popular with college students that live off campus for example. If you needed to raise the property limits you could see a rise in your deductible of around $48.


I don’t suggest you skimp on this type of insurance unless you are really a minimalist with a lot of inexpensive possessions. 

Higher End Renters Insurance

This is what I recommend for anyone that is not living singularly. It’s only $402 per year.


If you can pay it up front, do so.


It’s maximum coverage and you have nothing to think of further.


Split it with your spouse or partner and get all that you can. 

Mid-Range Renters Insurance

Now, here’s a way to look at this that will make the comparison clearer and simpler. 


Find out what coverage will satisfy all the people in your household.


If you don’t fall into the first group of a college student or a single person and you have a family with you then mid-range and up may be the right choice for you.


Sit down and take stock in your situation and find out if your belongings total more than what the minimum renters insurance would cover.


Also, list anything that is big-ticket like jewelry, furs and the like. You may want an endorsement for these things and a larger renters insurance plan.


Mid range renters insurance will run between $120 to $190 and meet most of the needs of the multiple family household.


It’s typical that the renter will increase the deductible to $1,0000 and bump up the property coverage and get the endorsement for the high-ticket items.


I’ll explain that a bit more after I cover the higher renter insurance next.


Just keep in mind though that though the monthly payment will be less if you raise the deductible you still have to pay that $1,000 out-of-pocket.


Make sure what you own is worth more than the deductible for any insurance policy.

High-Value Endorsements or Riders

These may or may not be worth it. Make sure it is before you invest.


These riders are scheduled which means you have to have a deductible for each item. Typically it will cover one percent of the value of the item. 


Ask yourself if you can afford to or want to pay for a deductible of up to $1,000 for one item because that’s what it may be.


If it is a big diamond ring or if you have a large jewelry collection it may be worth it.


Typically, a regular renters insurance policies will cover these items but, only up to $1,500.

Tip from the uber rich: They keep their real jewelry in a bank vault or house vault and will wear the fakes they bought. Why? Because jewelry of this value is frankly too expensive to just wear. Once the value tops a certain cap amount, it’s an investment. The same can be said for inherited items that are handed down. Keeping them in a vault and not adding an unnecessary rider can save your funds for a rainy day.

FAQ's

How much renters insurance do I need?

How does the insurance company value your items?

How long does it take to get renters insurance?

What is your stuff protected from?

How do I file an insurance claim?

Why might my claim be denied?

Can I get renters insurance for my storage unit?

Do I need renters insurance as a college student?

Can I have two renter insurance policies?

Why is renters insurance so cheap?

Who Needs Renters Insurance?

How to Shop Around for Quotes

1.

Don't give into the hype: Commercials are there to hook you. Don’t decide without shopping around and getting multiple quotes. It’s always good to speak to a live agent instead of filling out an online form. You can get your questions answered and negotiate a rate.

2.

Ask about what discounts are available: Ask about what discounts are available. 


There are some common ones here:

  • Bundle other insurances together.

  • Age discounts over a certain age

  • Clean driving record

  • Pay the premium upfront 

  • Go paperless for the bill

  • Get your car equipped with security and safety features. Alarms and anti lock brakes and the like.

  • Your organizations may have discounts

3.

Watch your credit: You will get judged on your credit and it’s legal. There are only 3 states that this is not allowable--Hawaii--California--Massachusetts.

Next steps...

There’s a lot of information concerning something as simple as renters insurance. I’ve taken the time to explain the hidden elements that could cost you more money and loss than you deserve.


Remember to ask questions and take your time filling out your forms and enjoy your peace of mind in your new place. 

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