Renters insurance is an easy type of insurance coverage to overlook if your lease agreement doesn’t require it. Many young professionals don’t even realize it exists or are misinformed as to what it does and doesn’t do. Additionally, believing that your possessions aren’t valuable enough to pay for coverage is also a common misconception.
Unfortunately, when disaster strikes you inevitably find yourself with more expenses than you bargained for and the knowledge that much of that cost could have been covered by the right policy. If you’re lucky, there’s still time to avoid that fate, but the choice is yours. Once you do start to shop around for a policy, here are a few things to keep in mind before making your decision.
1. Types of Coverage
The two basic types of renters insurance policies are Replacement Value (RV) and Actual Cash Value (ACV). If the insurance company needs to replace something an ACV policy will consider usage and depreciation when calculating how much to pay you, while RV simply considers the cost of that item brand new. Because ACV does not provide you the full value of actually replacing your possessions it is cheaper than RV. So if you have a lot of brand new electronics or appliances you may want to consider paying the higher premium to ensure you’re able to replace everything as closely as possible.
2. The Value of Your Possessions
Do not guess at how much your things cost when listing them out for your policy. Doing so can leave you significantly undercompensated if you ever need to make a claim. Do a careful inventory of your items and then do some research to figure out their true value.
3. Pet Premiums
Certain pets can hike up your premiums based on the insurance company as well as the laws in the area in which you live. This is an especially important topic to research if you own certain dog breeds labeled as more aggressive. Do your homework so you know exactly what kind of extra fees you may be looking at.
4. Available Discounts
Some policies will include discounts for improved safety features like new smoke detectors, fire extinguishers, security systems and deadbolt locks. Companies can also offer rate reductions if you bundle different types of coverage with them. Taking advantage of any available deals can provide significant savings in the long run.
5. What’s Covered
These days, items are often bundled together or automatically included with each other, such as major credit cards insuring the car rentals their customers charge at no additional cost. Unfortunately, not all insurance transactions act that way, and renters insurance is one of them. Unlike the convenience of your AMEX car rental insurance, some items are either excluded from standard renters policies or their amount of coverage is capped at a set amount. So if you have some particularly expensive jewelry, electronics, etc. look into paying to add a rider to your policy to cover these more valuable items.
6. How to Compare Policies
Just like with the many car insurance quote comparison sites you can find all over the internet, there are online tools you can use to evaluate different renters policy options. Once you know if you want replacement or cash value coverage, look for clauses that exclude damage caused by certain natural events such as floods and earthquakes. Also find out what kind of relocation benefits are included if you get displaced while they repair your dwelling. You will also want to investigate what to expect if you ever need to go through the claims process. These details can vary from policy to policy, so make sure you read the fine print to make sure the quotes you’re considering are apples-to-apples comparisons.
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