Renters Insurance...What's That?
The word insurance is one that often evokes groans and flinches from people who hear it.
It seems you need insurance for everything: life insurance, auto insurance, medical insurance....and in most cases it is required by law to have. It's no surprise that many new tenants completely overlook acquiring renters insurance. But they shouldn't.
A common misconception is that the insurance provided by ones landlord covers everything in an apartment. In reality, it only insures against any physical damage done to the building; everything else is still vulnerable to theft and natural (or unnatural) disasters.
If you plan on moving into an apartment, or you already live in one, it's in your best interest to consider getting renters insurance. Having it can insure your possessions, cover any liabilities about personal injury, and pay for any living expenses if your residence become unlivable!
Plus, it's dirt cheap too.
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What Types of Renters Insurance Are There?
There are two main branches of renters insurance: Actual Cash Value and Replacement Cost. It's important to take this into consideration when choosing a policy, because the type you choose determines how much your property is insured for.
Actual Cash Value (ACV) coverage will only repay the depreciated value of any possession damaged or stolen. This means you will get back less than the amount of money you paid for it. While It might not sound too attractive, it is the cheapest option of the tw.
Replacement Cost (RC), on the other hand, will fully refund you for any items lost or damaged. So if your 4-year-old toaster explodes, you will be reimbursed the exact amount you paid for it! The trade-off here is a higher monthly premium.
How Much Does Renters Insurance Cost?
Ironically, (or perhaps luckily), renters insurance isn't all that expensive. In fact, it's one of the smartest investments a tenant can make. The most a renters insurance premium (monthly bill) will cost you is a couple hundred dollars per year. Compared to the coverage you get, it's really a steal.
One of the reasons people neglect to get renters insurance is because they overestimate the price. That word "insurance" rubs people a certain way and sounds expensive. But that isn't the case here.
Of course, there are ways to lower your renters insurance premium. By installing security devices like burglar alarms and smoke detectors, you can reduce the monthly expense. Another way is to pay a higher deductible, in the event that you do have to make a claim.
Likewise, there are ways to increase a premium, the most notable of them is owning a dog. Some providers might not even offer you coverage if the dog is an aggressive breed (i.e. Pitbulls), and / or if it has bitten someone in the past.
What Does Renters Insurance Cover?
Renters insurance can potentially provide several different layers of protection. The one aspect that comes standard in every policy is personal property protection. Under this kind of coverage, your possessions and valuables are insured against several forms of damage and deviance including:
- fire or lightning
- windstorm or hail
- riot or civil disturbance
- vandalism or malicious mischief
- broken glass
- volcanic eruption
- falling objects
- weight of ice, snow, or sleet
- accidental discharge or overflow of water
- water-related damage from home utilities
- sudden and accidental tearing apart
- electrical surge damage
Two types of natural disasters that aren't covered in most renters insurance policies are earthquakes and floods. If you live in an area prone to either of these, you'll probably have to buy a separate policy specifically for them
Another benefit of having renters insurance is that some policies offer liability protection. This means that if someone slips and falls in your apartment (and decides to sue), your renters insurance will cover the costs of the trial, up to your liability limit. Not bad...
Some policies even offer to pay for any additional living expenses should you have to relocate from your apartment due to damage caused by any of the mentioned disasters! This means you'll be able to live in a similarly priced tenant while your apartment gets repaired. The amount of time this will occur over varies between policies. But still, it's a very valuable asset in a worst-case scenario.
The benefits of renters insurance speak for themselves. It is a very sensible investment to make; because you never can tell what will happen in the long run.
Some landlords make it mandatory to have renters insurance in order to rent out an apartment, so its best to find the type of coverage that fits you securely.
There are countless competitors on the Internet and in your local phonebook that are more than willing to sell you renters insurance. Round up a couple, compare there prices and options, and make the best educated decision you can for your future.
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