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What Renter’s Insurance Is & Why You Need It

Posted on 07. Jan, 2009 by Pete Bekisz in Apartments

You probably never thought about what happens if your apartment catches on fire, if someone breaks in and steals your new HDTV, or if one of your friends gets hurt and decides to sue. You might think your landlord’s insurance covers all of these things but unfortunately, kimosabe, you’re wrong.

The best way to protect yourself from selling your left kidney before you can replace all your worldly possessions is with renter’s insurance. And because renter’s insurance claims usually have nothing to do with visiting your neighborhood M.D., the policies are significantly cheaper than health and auto insurance.

Wordly Possessions? Uh … I Don’t Have Any

Yes. Yes you do. You may think you don’t own enough stuff to warrant purchasing a renter’s insurance policy, but you do. Let’s assume for a second your apartment just went up in flames. How much would it cost to replace your:

• Couches, Tables, Lamps, and Bed
• TV, Stereo, iPod, Computer, Printer, Digital Camera, and Cell Phone
• Microwave, Toaster, Panini Press, and Coffee Pot
• Dishes, Pots, Pans, and Silverware
• Clothes, Towels, Sheets, Blankets
• Jewelry
• Books
• Artwork & Decorations

The answer is likely something similar to “a few easy payments of just several thousand dollars!” Plus shipping and handling, of course. Unless you feel like paying for all of this out of pocket, you may want to consider renter’s insurance.

Speaking of stuff you may have to pay for out of pocket, unless you have renter’s insurance, if someone breaks themselves in your apartment and they sue you for medical costs, you’d have to pay those, too.

Fine. You’re Right. How Much Does Renter’s Insurance Cost?

The cost really depends on the dollar amount of your coverage, your deductible (how much you have to pay out of pocket … think of it like a co-pay), where your apartment is, the property’s claim history, and whether or not you want to be reimbursed for your stuff’s actual cash value (ACV) or replacement costs. What’s the difference, you ask? Quite a bit.

The actual cash value of something is what it’s worth right now. For example, if your laptop is five years old, its ACV is much lower than what a brand new MacBook Pro would be worth. With an ACV replacement policy, you’d be reimbursed for what your laptop was worth at the time it was burned/stolen/eaten by gorillas/whatever; with a replacement costs policy, you’d be reimbursed for whatever it costs to go out and buy a sweet new laptop with similar features.

As you may have figured out by now, replacement cost policies generally have a higher monthly premium than ACV policies, but the advantage is you get all new stuff. ACV policies are cheaper, and you still may end up with all new stuff, but it probably won’t be as nice.

Where Do I Get Renter’s Insurance?

Most major insurance companies will underwrite a renter’s policy for you. Before you sign anything though, you’ll want to get quotes for ACV and replacement costs policies from different companies and agents. Using a Web site like HometownQuotes.com, you can answer a few questions online and they’ll do all the research for you. For free. It’s like cheating on a research project, only better.

If you’re lucky, you’ll never have to file a renter’s insurance claim, but many consider it to be worth the investment just for the piece of mind you get from it.

About Pete Bekisz

Pete Bekisz is the editor-in-chief of LifeNinjas. He lives in New York, listens to the blues, pretends to play the piano, and enjoys flourless chocolate cake. He also works in the marketing department for a small liberal arts college.

Tags: Apartments, insurance