When looking for a renters insurance policy, your main focus should be how much coverage you need to cover your potential losses. Calculating the value of your belongings can be done by considering the replacement cost value.
The replacement cost value is how much it would cost to replace the belongings if they were damaged or lost. Personal belongings can be clothing, furniture, computers, gaming systems, books, appliances, jewelry or art. Calculate how much each item is worth and add them together, beginning with the most expensive items. Once you know how much the items are worth that you want to insure, you can purchase an insurance policy for the right amount of coverage.
You don't have to add everything to your insurance policy if you don't want. The more coverage you have, the more you'll have to pay. If the cost of filing a claim would be more expensive than paying to replace the items, it may be worth it to leave some items uncovered. Expensive items like electronics may be best covered beneath an insurance policy, however, as they're more difficult to replace.
Not everything is covered under a renters insurance policy, either. Renters insurance policies have a limit on jewelry, art, cash, electronics and musical instruments.
Monetary Coverage Under Renters Insurance
Renters insurance generally goes by $10,000 increments. The average policy with a $500 deductible covers:
- $25,000 personal property
- $100,000 liability
You can either extend or limit your coverage from here depending on the value of your belongings. For example, a smaller policy with the same $500 deductible covers:
- $12,000 personal property
- $100,000 liability
Liability insurance typically comes in $100,000 or $200,000. If you believe that you are more likely to face a lawsuit, you may need more liability insurance. This may be due to having a pet that doesn't like other animals or people, frequently hosting guests or other high-risk activity. You can even purchase an umbrella policy to extend your liability coverage beyond what your renters insurance covers. If your renters insurance covers $200,000 but you face owing $300,000 from medical and legal bills after your dog bites someone, an umbrella policy will cover the remaining $100,000.
An average renters insurance policy typically covers $1,500 for jewelry, so you may want to purchase a jewelry endorsement to cover more expensive jewelry. Also keep in mind that a higher deductible means lower premiums. Yet, that also means that you'll have to pay more upfront after filing a claim.
The True Cost Of Renters Insurance
As of 2020, the average cost of renters insurance is approximately $16 a month. This is hardly more than most streaming services. This number depends on the amount of coverage as well as:
- Your credit history
- Building (apartment, home, etc.)
- Whether you own pets
Having poor credit or a long history of claims may cause your renters insurance premiums to rise. Certain locations that are prone to theft, vandalism or natural disasters may also charge more for renters insurance. You can lower your renters insurance rate by safeguarding your rented property with fire alarms, burglar alarms and other safety systems.
Why Renters Insurance Is Important
Only about 40 percent of tenants renting a property carry renters insurance, leaving themselves open to great financial loss. There was $6.49 billion lost in property from 2010 to 2012 due to fires alone. Other issues concerning bites, falls, theft and vandalism are also huge threats to tenant safety and security. Not everyone can afford to replace all of their belongings after a disaster, and a landlord's insurance won't cover your belongings.
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