Renter’s Insurance

Renter’s insurance, which covers your medical and legal expenses if someone is injured inside your home, will cost you somewhere between $100 and $250 a year, depending on the policy and company. Discounts are given for having security systems and smoke detectors. A standard renter’s insurance policy does not cover earthquake, flood, or hurricane damage. If you live in an area where these natural disasters are likely, check your policy and add riders as needed.

A high deductible means lower premiums. If you have a deductible of $500 and a sound system worth $1,200 is stolen, insurance will pay you $700 for your claim ($1,200 minus $500 equals $700). Insurance kicks in only after the deductible is met and exceeded. Replacement cost coverage will cover the cost to replace an item no longer usable.

Review your policy for financial caps. For example, some policies cap jewelry at $1,000. If you have items more expensive than the financial cap covers, look into getting a personal property rider—an add-on to a standard policy that covers expensive items.

And don’t forget to do an inventory. Take pictures and videos, and write down serial numbers of items. This will help police track stolen items. Know what items you have and how much they are worth. Download the app for the Know Your Stuff® Inventory Checklist from the Insurance Information Institute and always have access to this information anytime and anywhere. You never know when a disaster will strike.

Common Renter’s Insurance Terms

Deductible

The deductible is the amount you have to pay out of pocket before your insurance will pay anything.

Premium

The premium is the amount you pay monthly to have insurance. (Does not go toward your deductible.)

Actual Cash Value (ACV)

The ACV is the amount each item is worth at the time of the claim. For example, a computer purchased for $1,500 six years ago will have a depreciated (lower) value today. Insurance will reimburse at the amount the item is worth now.

Replacement Cost Coverage

Replacement Cost Coverage is coverage that will pay for replacement cost if a particular item is worth more to you than the ACV allows.

Annual Limit

The annual limit is the maximum amount your insurance will pay to cover the cost of damaged items in a calendar year.

Rider

A rider is a written agreement that enhances or alters your policy.