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Renters Insurance

A renters insurance policy is relatively inexpensive and easy to obtain.

Renters insurance insures your possessions if there is a fire. [©Jupiter Images, 2010]
©Jupiter Images, 2010
Renters insurance insures your possessions if there is a fire.

Renters Insurance

Renters insurance is a policy that covers the personal possessions within a renter's home, apartment or condo. Many people mistakenly assume the landlord is liable for any losses that a renter may incur. But the truth is that unless the owner of the building is found to be somehow liable for damages, which would have to be proven in court, personal possessions belonging to the renter are not the responsibility of the landlord.

The good news is that renters insurance is typically inexpensive, as the physical building itself isn't included in the policy. According to The National Landlord Tenant Guides, the cost of renters insurance for $30,000 of property protection and $100,000 of liability insurance starts at about $12 per month.

People Who Need Renters Insurance

Anyone who is renting needs renters insurance. Many renters feel that their belongings aren't worth enough to justify the cost of insuring them, but the cost to replace those items can be substantial. Determining the value of possessions is made easier through an online calculator like the one at Homesite. An inventory of possessions helps make the decision to buy renters insurance and proves to be invaluable if a claim needs to be made. It should be kept, along with receipts for larger purchases such as electronics and appliances, in a fire-resistant box at home or a safe-deposit box at the bank.

Coverage Provided by Renters Insurance

Coverage varies, but most policies cover loss due to fire (including water and smoke damage), theft, lightning strikes, water (due to pipes which have burst), electrical surges, falling objects, volcanoes, riots and windstorms. In the case of smoke and water damage, sometimes possessions aren't destroyed but need special cleaning. Renters insurance covers this as well, for everything from clothing to furniture.

In addition, if the rental isn't livable while repairs are being made, renters insurance covers the costs incurred for a hotel and meals. Typically a certain dollar amount is assigned per day for these types of expenses, with the policyholder being responsible for the balance.

Liability insurance is also a part of most renters insurance policies. If someone is injured while visiting a rental unit, then the person who lives there could be sued for medical bills as well as pain and suffering. Liability insurance would take care of any such cases.

Damage due to floods and earthquakes aren't part of most renters insurance policies. People who live in areas prone to such natural disasters often obtain a separate policy or rider to cover property damaged in either of these instances. Damage due to wind may not be covered in hurricane-prone parts of the country. Also, most insurance policies will only cover a standard amount for things such as jewelry. Riders for pieces of jewelry that exceed limitations should be added to a renters insurance policy to give complete coverage.

Obtaining Renters Insurance

Most major insurance companies offer renters insurance. Policies are written for a predetermined amount to protect personal possessions and a dollar amount for liability. These figures determine the limits that a policy will pay in the event of a claim.

According to Insure.com, discounts are often given for holding more than one policy with a particular insurer. For example, holding an auto and renters insurance policy with the same company may result in a better price. The amount stipulated for the deductible on a claim also makes a difference in the cost of premiums. A deductible is the amount of money the insured has to pay before insurance kicks in. A policy with a high deductible carries a lower premium than one with a low deductible. A careful balance must be struck between enjoying lower premiums, while still being able to afford a higher deductible if a claim is made. Some companies offer discounts for senior citizens. Safety devices such as smoke alarms, sprinkler systems and burglar alarms can also reduce the cost of premiums.

A policy that pays the actual cash value for losses will be less expensive, but will only pay the amount that possessions were worth at the time of loss, not what it costs to replace them. Comparing the difference in cost for this type of policy versus a policy that covers replacement value can help avoid some unexpected surprises if a claim is ever filed.

Companies such as Progressive will give rates from several different companies through information entered at its website. As with any type of insurance, renters should obtain several quotes and read the fine print carefully before making a decision on which company to use.

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