The Cost of Typical Renters Insurance
Renter's insurance is a type of homeowner's insurance that does not protect the structure of the building but rather only the contents inside. Because of this, renter's insurance is typically much less expensive than traditional homeowner's insurance. Several factors contribute to the overall cost of a renter's insurance policy. The Independent Insurance Agents & Brokers of America (IIABA) states as of June 2010 that the average cost for renter's insurance in the United States is $12 per month.
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Personal Property
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Since there is no coverage for the building in which you live, your renter's insurance premium is driven primarily by the amount of contents you choose to insure. Minimum coverage amounts vary by company but are typically $10,000 to $25,000, with higher limits available upon request. Your premium increases with the size of your personal property coverage. Certain items like expensive jewelry may not be covered and need to be scheduled separately.
Loss of Use
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The loss of use coverage on renter's insurance pays for you and your family to relocate or find a new home when your apartment suffers a loss and is uninhabitable. Renter's insurance typically is sold with a certain amount of loss of use coverage included in the premium, based on the size of the personal property coverage you choose. You can increase the size of your loss of use benefit by paying additional premiums.
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Personal Liability
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A minimum amount of personal liability coverage also typically comes included with the premium paid for the contents coverage, but higher limits are available for additional premiums. The personal liability coverage pays for bodily injury and property damage costs for which you are legally liable, such as damaging your apartment, injuries which occur in the apartment, or even injuries you cause while away from the home such as rollerblading. Policies also typically come with a smaller sub-limit for no-fault minor medical costs.
Settlement Types
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Renter's insurance policies are typically written with an actual cash value (ACV) settlement type, meaning that your damaged property will be valued reflecting depreciation due to age and condition of the property at the time of loss. It is sometimes difficult to replace damaged property with new items with ACV settlement. For additional premiums you can usually endorse your renter's insurance for replacement cost, which replaces damaged items with new ones regardless of current market value.
Optional Coverages
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Many endorsements exist for renter's insurance policies and can be added for additional premiums. For instance, many companies offer identify theft protection as an optional coverage. Jewelry floaters, which typically require appraisals, are available for expensive pieces of jewelry that are not covered by the basic contents coverage. Some companies offer earthquake protection as an endorsement, while others sell it as a separate policy. Optional coverages can affect the overall premium greatly depending on which and how many you buy.
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References
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