When Do I need Renter’s Insurance?
Renter’s insurance covers personal property and not the actual structure, whether it is a home or apartment where you live. It is designed to provide coverage for personal possessions in the event of a natural disaster such as fire or flood, as well as theft. All renter’s insurance policies carry a limit of coverage, so the value of your possessions should determine the extent of coverage you need to have. For example, if you have 10,000.00 in possessions, then coverage should be the equivalent of that amount.
There are two kinds of coverage if your property is destroyed— Replacement Cost Coverage and Actual Cash Value. Replacement cost coverage takes into account depreciation of the value of the damaged property. Actual Cash Value covers the cost to replace the damaged property without taking into account depreciation. So if your iPad is damaged, the insurance carrier buys you a new one at market price. Replacement coverage only pays for the equivalent of a used iPad of a similar model and in similar condition.
If you live in an area where there is a high risk of theft, renter’s insurance may be worthwhile. Insurance carrier limitations on coverage, however, make it a much less desirable option in the event of fire or water damage. While it is impossible to know what each and every insurance carrier will cover in every circumstance, it is a good idea to discuss with an insurance representative the types of circumstances in which coverage would apply. Water damage, for example, can be limited only to water entering the property through a hole in the wall or ceiling. Flooding from surface water can be excluded. Lightning strikes, power surges, sewage back ups and the like may also result in limited amounts of coverage.
Most renter’s policies, like other types of insurance, have “add-ons” “riders” and “coverage extensions” which, for an increase in the premium, will provide additional coverage. Thus, the purchaser of renter’s insurance needs to anticipate, as best he or she is able, the extent of the increased coverage needed. The additional coverage usually applies to the more typical situations in which one would expect to have coverage in the first place. Often, renter’s insurance simply isn’t necessary. A typical college student with thrift store furniture and expensive electronics might save more money in the long run insuring the electronics through a repair/replacement insurance policy purchased at the time of sale. Although store repair/replacement policies are often equally limited in coverage, they may be cheaper in the long run than renter’s insurance which insures the entire property. Renter’s insurance, on average, costs about 40.00 per month.
If you need assistance in interpreting a policy, the Loeschen Law Firm can certainly help. We know how to read the fine print and we know which questions to ask to make sure you are getting the right type and amount of coverage. We’re here to help — get a consultation.