How to Choose Renter's Insurance

Many people assume that if they are merely renting, insurance for their residence is unnecessary or unreasonably expensive. But with the explosive growth in ownership of home electronics, many people own much more expensive stuff than ever before. Replacing a video game console and just 6 games would be cost close to $1,000. Add in the cost of personal computers, cell phones, TVs and DVD collections, and suddenly you have a lot to lose. So don't delay and purchase renter's insurance using the steps outlined here.

Instructions

1. Make a list of the items that you have which could be stolen or destroyed in a fire. This process will need to be updated regularly. Insurance agents say that one of the biggest problems people often have in filing an insurance claim is that they cannot remember everything that needs to be on the list. Most people can remember the big things like major appliances and furniture, but can you remember your jewelry, comic book collection and a list of the DVDs you own?

2. Take pictures or do a video walk-through of your house. Open drawers and cabinets and slowly zoom in on all the items, then take high resolution snapshots of the items. Store these in a safety deposit box or another place off the premises. Should you need to file an insurance claim, these pictures and images will help you remember all the items that you need to list. Update these pictures at least once every 6 months.

3. Ask your insurance agent about the type of policy that is best for you. Replacement insurance is more expensive but pays you what you pay to replace an item, not its fair market value at the time of the claim. This can be the difference between getting $200 for your year-old laptop, or getting $1,000 to replace it.

4. Determine how much coverage you need. The average renter's insurance policy is for about $25,000, but that can be less money than you think. Imagine the worst case scenario--a fire destroys everything you own. You will need to buy clothes, sheets, towels, dishes, groceries, furniture and all your stuff. Also, remember that things you don't think of add up quickly. Five pairs of jeans is easily $100, but then add work clothes, swimsuits, underwear and socks and you'll begin to see what your wardrobe alone could cost to replace.

5. Find out what your policy limits are and discuss the need for riders. Riders are specific additions to your insurance policy and can cost a bit extra, but may be well worth it. For example, many policies need an earthquake rider, or damage from quakes will not be included. Almost no policy covers flooding without a specific rider just for flooding. Another common rider is for home electronics.

6. Review your list of stuff with your insurance agent. He can suggest other add-ons that will help protect you, like a rider for collectibles to cover your comics, antiques or artwork. He can also suggest things that will help lower your insurance costs, like adding an alarm system or forcing a landlord to upgrade old fuse or breaker boxes.

Tips & Warnings

• Renter's insurance will cost about $300 a year for $50,000 in replacement insurance, depending on the age of the home you rent and the neighborhood. Bad neighborhoods with more burglaries increase the cost. Old wiring or other hazards and the distance to your local fire department can also play a role in the cost of your insurance.

• Be sure to update your household inventory regularly and keep a copy of it, along with the serial numbers of major electronics somewhere outside of your home.