How to Calculate Renter's Insurance

You need renter's insurance if you can't afford to replace your belongings.

You're convinced buying renter's insurance is a good idea, but you don't know how much to buy. The policy protects your belongings against various perils such as fire and theft, but doesn't offer any protection for the building itself, because presumably that is covered by the owner's insurance policy. Because renter's insurance is primarily for your belongings, the premium is directly related to the amount of contents coverage you buy. It is important to know the value of your contents so you're adequately protected without overpaying premiums.

Things You'll Need

• Inventory of belongings

Instructions

1. Create an inventory of your belongings. Typically, inventories are itemized on paper, though video inventories are also valid.

2. Write down or videotape all the items in one room of your house, like the living room. Itemize all furniture, electronics and other items of value. Note serial or model numbers where appropriate. Record the original cost or estimated current value of each item, to the best of your ability.

3. Repeat this action in the other rooms of your house. Inventory similar rooms together, grouping together all bedrooms or all bathrooms, so like items are calculated together.

4. Tally the total values of the items on your inventory. Round up to the nearest thousand.

5. Call your insurance agent to request a quote. Provide the dollar value of your belongings.

6. Store your inventory in a fire-resistant safe, safe deposit box or other secure, off-site location. It is easier to update an existing inventory in the future than to create a new one. The inventory will also be useful if you have to file a claim.

Tips & Warnings

• State Farm Insurance provides a detailed home inventory checklist for free on its website, and other sites provide electronic renter's insurance coverage calculators (see references). Tools like these may make your calculations easier.

• Renter's insurance property claims are typically settled as actual cash value unless you pay extra premiums for replacement cost coverage. Actual cash value settlements typically do not provide enough money to replace the damaged items.

References

• State Farm Insurance: How Much Renters Insurance Do I Need?
• US Insurance Online: Renters Insurance

Resources

• State Farm Insurance: Home Inventory Checklist
• Homesite Home Insurance: Renters Insurance Coverage Calculator