How to Estimate Renter's Insurance Needs
Renters insurance is the same in form as homeowners insurance in that it provides both property and liability coverage; yet nearly two out of three college-aged renters do not have insurance, according to an Allstate-commissioned survey. The renter has personal property that must be insured and must ascertain the adequate amount of personal property insurance to purchase to protect against loss or damage. The liability coverage limit is no less important to evaluate even though insurance companies often provide set liability limits to take some of the guesswork out of the process.
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Instructions
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Estimate how much renters personal property insurance to purchase by first evaluating the replacement cost of all personal belongings. Make an inventory list of all possessions. Purchase receipts are helpful in ascertaining the cost of items. In the absence of receipts, you can gauge the cost of possessions on the Internet through merchant sites. Insurance policies pay either replacement cost, which is the cost to replace lost items with new items or actual cash value which is the depreciate value of an item. The latter reimburses less in a loss but is less expensive from a premium standpoint.
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Perform a personal assessment of how much loss or damage of personal items can be sustained without substantial financial hardship. If you have the ability to replace many personal belongings without the benefit of insurance you can eliminate some of the insurance premium by selecting less coverage. If a large loss poses serious financial hardship, you will need more coverage to protect against damage or loss. Select a reasonable deductible to reduce premium expense. Insurance companies often offer deductibles at different levels with varying amounts of discounts on premiums.
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Assess your total assets and future earning potential to evaluate how much in personal liability limits to purchase. In the event of a lawsuit for personal liability, calculate how much you have at risk were a judgment to be entered against you. If you have substantial assets, you are a larger target in the event of a lawsuit and should consider higher liability limits than may be typically offered by the insurance company.
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Tips & Warnings
Internet auction sites are a way to evaluate the actual cash value of depreciated possessions. Additional liability limits may be purchased in the form of a separate policy known as a personal umbrella liability policy.
Most people tend to underestimate the value of their personal possessions and under-insure to save some money.
