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What You Need to Know About Renters Insurance

© Regina Ludes

In my previous article, I discussed security issues and how renters can keep themselves safe in their apartment home. One of the best security measures any individual can take to protect what's important to them is an insurance policy. Renters insurance is a wise investment that doesn't cost nearly as much as you might think.

In this article, I'll discuss renters insurance in greater depth -- why it's important, what it covers, how to purchase it, and how to make a claim.

Insurance: Why Renters Need It

After finding the apartment home of your dreams and finally settling in, the last thing you are likely to think about is renters insurance. Even if you don't think you need renters insurance, take a closer look at your lease agreement. Many landlords nowadays require that you have renters insurance as part of the lease agreement. This requirement is meant to protect the renter as the landlord's insurance only covers the property itself as well as the common areas, such as the roof, hallways, and lobby. Protecting your personal belongings is up to you.

Consider these scenarios:

* You invite friends over to your apartment for dinner, and one of them slips and falls, breaking her wrist.

* A pipe bursts, from above your ceiling, flooding your apartment and damaging many of your belongings.

* You come home after a long weekend trip and discover that someone broke into your apartment.

In each instance, your renters insurance will cover whatever expenses you may have to replace or repair whatever items were lost or damaged. It also covers your responsibility to others who live with you or visit you in your apartment home, even a family member or a pet. Some policies will also reimburse you for living expenses in the event you need to relocate temporarily as a result of the loss. Knowing that you have insurance coverage will bring some peace of mind, thus turning a disastrous event into a minor headache.

Types of Policies

There are two types of insurance policies available to renters. An actual cash value policy will pay the cost to replace your possessions minus the depreciation cost of the items up to the limit established by the policy. for example, if your two-year old computer is damaged after your unit is flooded, your policy will pay out the initial cost of the computer minus how much it depreciated in the two years since you purchased it.

A replacement cost policy will pay the actual cost of a new item to replace the one that was damaged or lost, up to the limit of your policy. Using the same example above, a replacement cost policy will cover the cost of purchasing a new computer to replace your damaged one, up to a limit set by your policy.

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