Yes, you probably should get renter's insurance

Renter's insurance? Why would I need renter's insurance? It's not my problem if our apartment building burns to the ground! It's the landlord's problem. I'm not buying any stinkin' insurance when I'm paying the owner's mortgage!

And so goes the discussion in the heads of many renters around the world. Renter's insurance makes no sense to many, unless they've lived in a place that has indeed actually burned to the ground or otherwise been destroyed. But now those who read this blog can be enlightened too.

The purpose behind renter's insurance is quite simple: It is insurance for all your "stuff" and helps you replace the stuff if it's destroyed. It's not your responsibility to insure the building. That's for the owner. But your stuff is your problem.

Imagine having a fire in your apartment and losing all your furniture, food, clothing, and belongings. Not only do you not have a place to live, you don't have any stuff either. Have you ever considered how much it would cost to replace all of that? Most people I know don't have the means to just run out and buy a bunch of furniture and new clothes and household items at the drop of a hat.
Renter's insurance is relatively cheap. Probably a couple hundred bucks a year will cover you. You should be sure to ask about special items like jewelry, furs, electronics and antiques. You might need to buy some additional coverage for these items.

Also find out if you're being insured for the actual cash value of the items or the replacement cost. Clearly, a 10-year-old couch may not be worth much, and the cost to replace it will be much more. Decide whether you'd have a less expensive policy that just pays you for the value of the old one, or a bit more expensive policy (but not much, usually) that pays you enough to buy a new one.

Want to learn more? Check out some good sites here and here.

Tracy L. Coenen, CPA, MBA, CFE performs fraud examinations and financial investigations for her company Sequence Inc. Forensic Accounting, and is the author of Essentials of Corporate Fraud.
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