Is Renter's Insurance Worth Buying?

By Author: Frank Kasimov
Total Articles: 4762
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If you are living in a rented accommodation, you do need to consider renter's insurance. Although your landlord will have to provide building insurance before he is cleared to accept renters in his property, he will not have to provide any insurance to cover your belongings that you take to the property with you. It is also worth checking what level of coverage you are investing in. If it is basic, you may need to top up the coverage to be sure you are not left uncovered in the event of a major disaster.

Most policies do not as standard cover damage to either property or possessions from floods, earthquakes and hurricanes but you can buy extra coverage or a separate rider to cover these things. You should know whether you state is prone to hurricanes and earthquakes so you'll know if it's worth investing in extra coverage.

When you are looking for possessions insurance, you need to consider what coverage you are being offered. Some companies offer actual cash value. Some give replacement cost coverage. There is definitely a difference in these types of coverage; generally, the latter is better. Actual cash value ...
... sounds all right but what it actually means is that the insurance company will pay you the value of the goods at the time they were damaged or stolen which can actually be a problem. For example, a few years ago you may have bought a laptop that cost you $900. However, over the last few years progress has now moved so quickly that the same laptop would be considered old and be worth $300. If you have actual cash value in your policy, the insurance company is going to give you $300 which may well not be enough to get a new laptop; you'll have a deductible amount to pay. In reality, you may only end up with $150 from the insurance company, meaning you may as well have paid for a new laptop from the start, leaving the insurance quite worthless.

On the other hand, replacement cost coverage will pay you the actual cost of getting a new laptop, after you have taken into account your deductible. Which coverage you are offered as standard varies, so this really is a vital question that you need to be asking before you sign anything. If you seem to be getting a significantly cheaper deal, chances are the company is working on an actual cash value basis. Naturally, replacement cost coverage will be more expensive but it will definitely be the policy that pays out more. What you really need to consider is if you have possessions in your home that you cannot afford to replace. In most cases, the answer to this question will be "yes." Can you afford to replace everything if it is stolen or damaged by a flood or fire? Realistically, the majority of us couldn't afford to replace everything so even as a renter, you really need to have possession insurance.

You then need to have an inventory of your property's contents and what you are going to want to claim for in the event of the worst happening. Try and have each item recorded using serial numbers. Take pictures of your rooms, showing the goods in their locations and have a file of receipts when you purchase new items like televisions. All of this information should be retained on the premises in a fireproof safe or left with a close relative so that you can access it after your property has been damaged. Sadly, these precautions are not very cheerful and involve preparing for the worst.

Finally, consider where you will live if something happens that makes your property uninhabitable. Owners should naturally have some compensation built into their building's insurance that covers having to rent a house or stay in a hotel while they are unable to go home; however, this may not be standard in a possessions insurance policy. It is something that most insurance companies will add to the policy if you ask them to when you set up the policy. This coverage could be a lifesaver if you are left without accommodations for a week or so before you can find somewhere new to rent.
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