Not all renters insurance policies are created equal. When you purchase a renters insurance policy, it should generally be tailored to your coverage needs. This, of course, depends on how much coverage you need when it comes to personal belongings.
Renters insurance covers three main areas:
Personal Belongings Coverage
Personal belongings coverage under renters insurance provides compensation for your items in case they are destroyed or damaged due to fire, smoke, lightning, theft, vandalism and more. The amount of coverage you have for your personal belongings depends on their value.
Most renters insurance policies are either replacement cost value or actual cash value policies. An actual cash value policy will replace your items while accounting for depreciation. In other words, as the value of your items goes down, so does the amount of compensation you will receive. A replacement cost value policy will replace your items without accounting for depreciation. This type of policy is generally more expensive, but it also may allow you to replace your items in full.
How Do I Calculate the Value of My Belongings?
If you have receipts, you may be able to get an estimate from how much you paid at retail price. You can also look online for the general market value of your belongings. This is especially important for rare or expensive items, such as jewelry, furs, art and electronics. Some of these expensive objects have limited coverage under a basic renters insurance policy and need additional policy floaters in order to be completely protected.
Keep in mind that, if you have an actual cash value policy, the market value may change. This is important to keep an eye on so that you are not surprised by getting less than what you paid for when receiving compensation for some of your items.
Another part of renters insurance is liability. Personal liability insurance covers bodily injury and property damage that may occur on your rented property. If someone visits your apartment and trips over one of your rugs, for example, liability insurance can help with their medical bills and protect you from a possible lawsuit. Liability insurance compensation is generally a fixed amount as dictated by your policy. Most renters insurance policies begin at $100,000 for personal liability.
Consider your risk level if you are thinking about adjusting your liability insurance. If you frequently have company, you may want higher liability limits.