Why Do I Need Renter's Insurance?
What would you do if your apartment were damaged by fire or burglarized? Would you be able to replace all of your belongings: computer, CDs, clothing, books, furniture, electronics, etc.? What if someone slipped and fell in your home? Did you know that you might be responsible for some of their medical bills?
Unless you are certain that your personal property is covered by a parent or spouse's insurance, you should consider investing in insurance. Although your landlord should have insurance, his policy typically only covers the building itself. This means that if there was a fire in your building, the landlord's policy would cover repairs to your apartment, but not replacement of your property.
Is It Expensive?
Most renters' policies are really homeowner's insurance modified to fit the needs of tenants and the premiums are usually low. Most policies cost less than $250 a year and can often be paid monthly. A good place to begin searching for a policy is with your parents' insurance agent or the company which carries the insurance on your car.
Actual Cash Value vs. Replacement Cost Policies
Actual Cash Value coverage covers your personal property for the amount it is worth now, not the amount it would take to replace it with a similar, new item. Replacement Cost coverage covers the cost to replace your property with a similar, new item, even if that will cost more than the item was really worth.
For example, imagine you have an old television that your parents gave you, which was destroyed in a fire. If that television is several year old, it may only be worth $30 now - about what you would get for it at a garage sale. If you had an actual cash value policy, your agent would hand you a check for that $30 and you would have to come up with the additional money to purchase a new television. If you had a replacement cost policy, your agent would hand you a check for the $300 it would cost to replace your television with a similar, new one.
Obviously, the difference between these two types of policies can make a big difference. It is important that you read your policy thoroughly to make sure you understand what is covered and keep a copy.
Keep An Inventory
Could you sit down and make a list of everything you own? That's what an insurance company would require if you had to file a large claim. It is a good idea to record the serial number of all electronics and a photograph of other valuables. Keep those in a safe place, away from your home, in case you ever need to make a claim.
It is also a good idea to make sure all your valuables are marked with your driver's license number or other identifying mark to aid in identification and return of stolen items.
You may think your things aren't worth much. But the average person has over $20,000 worth of stuff. Your belongings are probably not covered under your landlord's policy. That's why it's a good idea to invest in renter's insurance.