How to Obtain Renter's Insurance

When you rent the place where you live, the owner will have insurance coverage on the dwelling itself, but that coverage won’t protect your personal possessions if something goes wrong, like a burglary or a fire. To protect yourself, it’s a good idea to take out a renter’s insurance policy. For a cost of about $10-$20 per month, you’ll get the peace of mind that comes with knowing your furniture, clothing, and other belongings will be replaced if they are stolen or damaged. You may not think your possessions are particularly valuable, but even an apartment full of inexpensive items can add up to an amount that you may not be able to afford to replace yourself.

Instructions

1. Consider how much coverage you need. The best way to do this is to write down everything you own and estimate how much it would cost you to buy it all new if you lost everything. If you just guess, you’re likely to underestimate. It’s hard to realize just how much all those shirts in your closet and those books on your bookshelf add up to. When you make your list, there’s no need to describe every item in detail: just write “50 books, 36 shirts, 1 leather couch, 1 queen bed,” and so on.

2. It’s easy to find companies that offer renter’s insurance in your area. Just do an online search for “renter’s insurance” plus your zip code. You will probably have several options, which will allow you to shop for competitive pricing. The cheapest company will not always be the best company, though—do some research on the company’s reputation for customer satisfaction. Also consult an insurance rating company like A. M. Best or Moody’s to make sure the company you want to use is financially solvent enough to pay you if you make a claim.

3. Fill out the application. This is where you’ll need to track down details on your unit such as year built, type of construction, and roof composition. Your landlord should be happy to furnish you with all this information. If not, sometimes insurance companies have the information in their databases. You’ll also have to answer questions like what kind of fire alarm system the building has, how close the nearest fire and police departments are, and anything else the insurance company wants to know to determine the risk of insuring your belongings.

4. Choose your deductible. How much could you afford to pay in a worst-case scenario? This is that amount you should choose for your deductible. Remember that choosing a higher deductible will give you a lower monthly premium. Renter’s insurance premiums are so low to begin with, though, that you may find it worth it to pay the extra dollars for a low deductible (such as $250). Your deductible means that if your $1,000 laptop gets stolen, you’ll pay the first $250 toward its replacement cost and the insurance company will give you the remaining $750.

5. Create a video or photo inventory of your belongings, and make sure to store it somewhere safe (away from your property, like in a safe deposit box or at your parents’ house). This will help you get paid by the insurance company if you ever need to file a claim. Also record the serial numbers of any items that have them (like your computer). Serial numbers can add credibility your claim and help police recover your items in the event of theft.

6. Review your policy. Once your application has been accepted and you’ve made your first payment, you’ll get a copy of your policy. Read it, make sure you understand it, make sure it has the correct deductible and coverage amounts that you selected, and make sure it provides the coverage you want. If you don’t understand anything or you want more coverage, contact the insurance company as soon as possible.

Tips & Warnings

• Usually, renter’s insurance also provides you with liability coverage that will protect you if someone is injured while visiting your rental unit.

• Renter’s insurance may also offer protection for personal property left in your vehicle (in case your car is broken into and your laptop is stolen, for example) and for the contents of your luggage while traveling (allowing your policy to reimburse you if your luggage is stolen).

• Your policy may also pay for temporary housing (such as a hotel room) if you need to live somewhere else because your apartment burns down.

• Some insurance companies will cancel your policy or raise your rate if you make a claim (or make too many claims), so consider the pros and cons carefully before putting your policy to work. You may want to just pay for your stolen TV and stereo yourself and save a potential claim for a potentially larger problem (like a fire).

• Your renter’s insurance will not cover everything. Damage caused by “acts of God” and “acts of war, declared or undeclared” are almost always excluded from policies.

• Opt for replacement cost coverage, not cash value coverage. Replacement cost coverage will buy you a new couch; cash value coverage will send you running to the thrift store for a used, $50 one.