Why You Gotta Get Renter's Insurance

During lean economic times, many of us start looking to trim extraneous expenses from our household budgets. But even if you've recently downsized your home and belongings, getting renter's insurance still makes a lot of sense. After all, how many of us could afford to replace all of our worldly posessions in the event of a fire or theft?

Replacement Insurance

When you start thinking about renter's insurance, the first question is whether you should get replacement insurance or just insure the value of your belongings. Well, we all know that things drop in value the minute you buy them, right? So, if you insured the contents of your closet for its value would you be able to get even one decent outfit with the cash?

Replacement insurance costs more than insuring your property at its actual value, but it also means that the insurance company will pay you something close to what it costs to replace it. That means paying you to replace your three-year-old Xbox 360 instead of paying you the yard sale value of it. Your flat-screen television, video game systems and appliances are just one reason to get replacement insurance. The other is that closet full of clothes. You didn't accumulate it all at once, so chances are you never thought about how much it would cost if you had to go out and buy new jeans, sweaters, shirts, and shoes all at once.
It adds up quickly. So does the value of your DVD collection, novels and even the dishes and pots and pans. Re-equipping just one room in your house or apartment could easily costs several thousand dollars. The goal of renter's insurance is to avoid ever having to pay that out of pocket.

Do a quick calculation of just one room in your house. Could you afford to replace the television, entertainment center, sofa and video games systems without some help? How many DVDs do you own? Even if the number is relatively small, the cost adds up very quickly.

Finding an Agent

When you start looking for renter's insurance, the first you need to do is find a good insurance agent. Several of the more prominent insurance companies, including Allstate, State Farm and Farmer's Insurance offer renter's insurance. But they do not all offer the same policies or the same prices. If you have an agent you trust, who perhaps handles your car insurance, start there. But don't stop there. Shopping around can literally save you hundreds of dollars a year.

When you start calling agents, be sure to ask lots of questions. Start with the obvious one -- do they offer replacement insurance? Usually, an amount somewhere around $25,000 in replacement coverage is enough for a small apartment, but do those quick calculations to be sure that it is enough for you.

Next, ask what is excluded from the policy. You are most likely interested in an all-hazards type of policy so that it covers loss due to theft or fire, but be sure to ask about things that are particularly threatening in your region. Live in the Midwest? Ask about tornado coverage. Live in California? Be sure that the policy covers fires, mudslides and earthquakes. In most states, an earthquake rider is required to get renter's insurance for earthquakes. If you live near a fault line, be sure to ask if you need extra coverage for earthquakes and what it costs.

And, almost no renter's insurance will cover flood damage, including damage from backed up sewer systems or from a rising river. If you live where flooding might be a problem, or plan to have stuff in a basement, ask about flood insurance.

Ask About Collections

Still have an awesome baseball card collection? What about books, DVDs, or vinyl records? Lots of jewelery? Most renter's insurance policies have limits for the specific amounts that they will cover unless you make a note of the collection when you buy the insurance policy. One of the limits that you should definitely ask about is the limits regarding electronics and computers. Be sure that the policy covers the software that you have loaded on your computers as well as the hardware.

See About Off-Site Coverage

Sometimes, renter's insurance extends beyond the edge of your home or apartment. In most cases, if you are transporting your laptop via your car and it gets stolen, it is probably covered by your renter's insurance.

When you buy your renter's insurance, be sure to get a full listing of what is covered, as sometimes you might be surprised by the coverage you have. Renter's insurance covers loss of food during a power outage, yourpatio equipment and much more.

5 Ways to Protect Your Home From Mudslides [HousingWatch]
5 Ways Homeowners Can Protect Their Home From Earthquakes [HousingWatch]
Worthwhile Insurance Policies [Walletpop]

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