Renters insurance covers tenants' personal property losses caused by fire, theft, vandalism and other hazards. Renters foot the bill for some of their property losses based on the deductibles they choose. Policies are usually cheaper if they have higher deductibles, but the least expensive coverage isn't always the best choice.
Your deductible on renters insurance is the amount of money you pay to replace your belongings before your insurer pays for any damage covered by your policy. For example, an insurer wouldn’t pay for a renter’s damaged computer if the computer’s replacement cost is $1,000 and the renter has a $2,000 deductible. A renter who has a $1,000 deductible and $5,000 worth of property damaged from an apartment fire could get at least $4,000 from his insurer to replace his belongings, depending on replacement costs.
Renters choose their deductibles, but their options vary from state to state. According to State Farm Insurance, renters insurance deductibles usually come in the amounts of $500, $1,000 or $2,000. However, the type of coverage you choose determines insurers’ reimbursements. Actual cash value coverage reimburses renters for what their property was worth when it was damaged or stolen. Replacement cost coverage pays renters the amount it costs to replace damaged or stolen belongings, minus the deductible.
Some renters lower their insurance costs by increasing their deductibles. According to the Missouri Department of Insurance, a higher deductible can reduce insurance costs by as much as 25 percent. However, consider whether you can afford the deductible you choose. People who live on a tight budget may not want to choose a $2,000 deductible if they generally don't keep at least that much in savings to cover potential property damage. Ultimately, low renters insurance costs create higher out-of-pocket expenses.
Don't guess at the amount of renters insurance coverage you need. Take the time to document your belongings by listing the electronics, furniture, jewelry and other items you own. Write down serial numbers where applicable. Photograph or videotape the rooms of your apartment to document the condition of the apartment and your belongings. Keep receipts for major purchases, your photographs and your inventory list inside a fireproof file. Renters who have proof of the cost and condition of their belongings can get higher reimbursements from their insurers if their items are damaged or stolen.
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