How Much Renter’s Insurance Coverage Should You Purchase?

November 24, 2021

When you buy insurance, you want to make sure you have adequate coverage. Not buying enough insurance can be financially detrimental. Buying too much insurance could be a waste of money, though. So how do you know just how much renter’s insurance coverage you need?

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What are you Covering?

First, figure out what you have to cover. Because you are purchasing renter’s insurance, you aren’t covering the actual structure of the home – you are covering your personal property. This means the items inside your home or apartment. It covers the loss due to weather related issues, theft, or vandalism. Your policy will cover your belongings up to a certain amount. It’s up to you how much coverage you buy.

How Much are Your Belongings Worth?

It’s a good idea to take an inventory of your belongings. Make a list of your personal items, the date you purchased them, the amount you paid for them, and their current value (if you know it). The more proof you have of the items, the easier it will be to get the coverage you need and to get the insurance company to pay the claim should you experience a loss.

What do you need for proof? Receipts to show proof of purchase is essential. Photographs are also a good idea, as they show proof that you have possession of the item as well as its condition. Keep the list and evidence in a safe place, such as a fireproof safe. It’s not a bad idea to have multiple copies of the documents as well.

What Type of Liability are You?

Renter’s insurance covers more than your personal belongings, though. It also covers any liability that you incur as a result of damages you cause to someone else. This includes injuries that someone incurs while on your property. It also covers damages you may cause to another person’s property. Each policy is different, though, so make sure you ask about the coverage.

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What’s the Total Value of Your Assets?

Once you know the risks you pose, it’s time to figure out how much you are worth. How much could someone take from you should they take you to court? This is the amount of renter’s insurance you want. Even though you don’t own the property you live in, you may still be liable for damages that someone incurs while at your property.

Typically, the liability on a renter’s insurance policy is $100,000. This may be enough for you and it may not. If your net worth is higher than this, you may want to be additional coverage. You may also want to consider buying supplemental policies on individual belongings. For example, do you have antiques that are worth a lot of money or maybe some heirloom jewelry? You’ll want to know the maximum amount per piece that your insurance company will cover. If it doesn’t cover the cost/value of the items you need to insure, you may need to purchase riders for those items.

The amount of renter’s insurance you should purchase is dependent on what you own and how much liability you bring to the table. It’s better to over-insure than underinsure, though. If you don’t have enough insurance, you put yourself at risk of financial destruction. Talk to your insurance agent honestly about the items you have and the risk you pose to determine the right amount of renter’s insurance to buy.

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