8 Questions to Ask Before You Buy Renters Insurance

Insurance isn't something many renters give a lot of thought to. In fact, a study by the Insurance Information Institute a few years ago found that only about 31 percent of renters buy renters insurance.

If you're renting, it's worth your while to consider joining their ranks. When you rent an apartment or house, your landlord is not responsible for your personal belongings if they’re stolen or damaged. You are, and renters insurance can help.

Renters insurance can also help protect you if you’re held legally responsible for injuries to another person while they’re visiting your home. And, because the policies don't cover the building itself, premiums can be relatively inexpensive.

If you decide to look for renters insurance, here are a few questions to ask to ensure you get the coverage you want.

1. What’s covered, and for how much? Most policies cover such personal belongings as furniture, clothing, jewelry, electronics and appliances, but only up to your policy limits. So, be sure to take the value of all your belongings into account before selecting your coverage levels. It should be easy if you have a home inventory, a detailed list of all of your personal possessions along with their estimated value. An up-to-date inventory will also help to speed up and simplify the claim-filing process.
    
2. Do I need additional coverage for some of my things? Standard policies may limit coverage for such valuable items as jewelry, furs, firearms, coin collections and silverware to a set dollar amount. Computer equipment may also not be included if you use it primarily for business purposes. Supplemental coverage is typically available in both cases.
    
3. When am I covered? Typically insurance covers losses due to theft, fire, smoke, explosions and water damage due to leaky pipes and overflows. Storm and flood coverage can vary. Oftentimes, if your renters policy covers an incident inside your home, it covers it outside your home, too. So, you may have the same coverage if something valuable is stolen from your car as you would have if it were stolen from your home. Keep in mind that, for any loss, you’ll need to pay your renters insurance deductible first before your insurance coverage kicks in.
    
4. Actual cash value or replacement cost? Here’s where you want to stop and think about how you’d want to go about replacing lost, stolen or damaged items. Say you have a previous-generation TV, and it’s stolen. If you’d be okay replacing it with another previous-generation TV, then an actual cash value policy may be just fine for you. However, if you’d want to replace it with a brand new TV, you may want to think about replacement cost coverage. It typically costs about 10 percent more than actual cash value coverage, but it may be worth it to you. Essentially, actual cash value takes depreciation into account so that you are reimbursed based on what the item is worth today rather than when you bought it. Replacement cost coverage is designed to reimburse you based on what it would cost to purchase a new replacement at today’s prices.
    
5. How much liability coverage do I need? Renters insurance typically provides liability protection that pays for both the cost of defending you in court and court awards—up to the limit of your policy. A standard policy may provide at least $100,000 of liability coverage, but additional amounts are often available at a relatively low cost.
    
6. What about roommates—human and otherwise? Renters insurance automatically covers spouses and immediate family members in the same household, but a roommate must be specifically named in the policy. Be sure to keep the policy up to date; damage checks may be issued to both parties, even if one has moved out. As for dogs, check with your independent insurance agent about what kind of coverage you may have.
    
7. What if I need to move out during repairs? If you can’t live in your rented home while it’s being repaired or rebuilt after a covered loss, most renters insurance policies will help with the costs. This falls under your additional living expenses coverage. It may help with hotel bills, temporary rentals, restaurant meals and other expenses. Be sure to check on financial and duration limits.
    
8. How can I save on renters insurance? If you’d like to pay less for your renters insurance, consider insuring your car or personal watercraft with the same carrier as your dwelling. This often gets you a multi-policy discount. You may also elect to have a higher deductible or to pay the entire cost of your policy at once rather than spreading it out through the year. Both can help you save on renters insurance in many cases.

Sure, oftentimes when you rent you have fewer worries, such as not mowing the lawn or painting the house. But, just think how hard it would be to replace all your personal belongings at once. That’s a genuine worry – one that renters insurance can help to minimize.

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