The Importance of Renters Insurance

10 09 2010

Featured on Military Finance Fairy

Renters insurance provides peace of mind when you sleep at night, but most importantly, financial protection against theft or destruction of your belongings when you rent a home or an apartment.  The premium is relatively low (a $30,000 policy may cost only $131/year) because it only covers your possessions within the home or apartment and not the physical building.

Renters insurance covers your belongings against:

  • fire or smoke
  • lightning
  • vandalism
  • theft
  • explosion
  • windstorms
  • water damage (not including floods)

Like homeowners insurance, renters insurance also covers your responsibility to other people injured at your home or elsewhere by you, a family member or your pet and pays legal defense costs if you are taken to court.

Renters insurance covers your additional living expenses if you are unable to live in your apartment because of a fire or other covered peril. Most policies will reimburse you the difference between your additional living expenses and your normal living expenses but still may set limits as to the amount they will pay.

There are two types of renters insurance policies you may purchase:

  1. Actual Cash Value – pays to replace your possessions minus a deduction for depreciation up to the limit of your policy
  2. Replacement Cost – pays the actual cost of replacing your possessions (no deduction for depreciation) up to the limit of your policy

It is extremely important to purchase either type of renters insurance policy.  I guarantee after your purchase one you will say to yourself “How did I go this long without one?”

Fix It Tip.  Fire extinguishers, dead-bolt locks and house alarms may guarantee you a discount to your renters insurance policy.

Fix It Tip.  Inquire within your car insurance company if they offer renters insurance.  Most times having more than one type of policy (car and home insurance) with a company yields discounts.

Red White Blue Tip.  Check with USAA for affordable renters insurance.




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