You’ve signed the lease on a new piece of property, and you’re ready to move in. Everything is taken care of, right?
Not quite.
Unless you have renter’s insurance, you’re a sitting duck, just waiting for something bad to happen. That might sound dramatic, but it’s the truth.
Renters insurance protects your belongings if disaster strikes. It even protects you if someone gets injured on your property, and covers your additional living expenses if you have to seek shelter elsewhere.
Renter’s insurance policies basically include everything you need if something goes wrong on your property.
How do you select renter’s insurance, though? It’s actually easier than you think.
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You need to decide if you want your renter’s insurance to cover the actual cash value or the replacement cost of your items.
If you choose the actual cash value, it will cover what the item is worth when it is destroyed. This is the value of the item based on depreciation.
For instance, let’s say that you buy an iPad for $500. A few years later, that iPad might be worth a third of that. Your insurance will pay the actual value instead of what you paid for it. That means you won’t be able to go out and buy a new iPad. Instead, you’ll just get the money that you’re out.
On the other hand, if you get replacement cost coverage, you’ll receive the amount of money that you need to replace the item. If it costs $500 to replace the item, that is the amount of money that you will get from your insurance claim.
Your premiums are higher if you choose the replacement cost coverage, but you get more money for the claim. You have to decide which is more important to you. Do you prefer to pay less now and get less later or pay more now and get more later?
Standard rental insurance caps out, so you’ll need to purchase riders for your expensive items. Let’s say that you have a family heirloom that is worth tons of money. It probably won’t be covered with your standard insurance policy. Purchase a rider so you will be reimbursed for the full amount if disaster strikes. You might not be able to get the memories back, but money certainly takes the sting out of the loss.
Once you purchase your insurance, be sure to inventory your assets. Write everything down and take a video of your items as well. Place everything in a fireproof safe so your log will be available if there is a fire or storm. Then, you can give it to the insurance adjuster if necessary. That way, you won’t have any problem making a claim if needed.
Renter’s insurance keeps you safe in a variety of situations. If you don’t want to deal with the expense of ruined items, this is a must. With the help of renter’s insurance, you can replace your items without out-of- pocket costs.
