Renters Insurance

January 11, 2010

If you’re living in an apartment, saving pennies so you can buy a house some time, and trying to cut costs where you can, you may find yourself wondering, “Is renters insurance good?” You might find yourself arguing, “After all, the landlord’s insurance will pay to rebuild the apartment if something happens. It’s not my responsibility.”

While it’s true that your landlord’s coverage is designed to replace the apartment building, the contents of your apartment – your clothes, your computer, any art, antiques or jewelry you own – those are all your responsibility, and that makes renters insurance not just “good,” but essential.

Just how essential is it? According to the Georgia Insurance Information Service, renters insurance is crucial for the following reasons:

  • It protects you against losses due to: fire or smoke, lightning, vandalism, theft, explosion, windstorm, and water damage from plumbing issues (but not from flooding, which requires flood insurance even for renters.)
  • Covers you against liability (within your policy limits) is someone slips and falls inside your apartment, or is injured by one of your possessions.
  • Insures your personal property against theft, when you’re away from home (for example, if your laptop is stolen from a hotel room.)
  • Covers your bicycle, if it’s stolen while you’re out on a ride, but other vehicles are not typically covered.
  • Is written not just for standard apartments, but also serves as the template for contents insurance for condos, co-ops and townhomes.

If you’re shopping for renters insurance, the best way to get a competitive rate is to be a savvy shopper. Here’s how:

  1. Inventory Your Belongings: Before you ever commit to a policy, before you even start looking, catalog all of your possessions, including descriptions, serial numbers, estimated values, purchase dates, and receipts (if you have them). Taking pictures of everything, or shooting a video, isn’t a bad idea either. Not only will this help prospective insurance companies generate an accurate quote, but it will also serve as a useful tool later, if you ever have to make a claim. Make a copy of everything and store it outside your home, for backup.
  2. Ask Questions: There are three key things you’ll want to ask about: theft limits (Ask for a list of standard coverages, compare it to your inventory, and then you’ll know if you need to purchase any personal property riders to extend your coverage), cash or replacement value (Coverage can be based on either cash value or replacement value, the first takes the age and condition of your possessions into account, the second bases value on the price of a similar item in today’s market. Replacement value policies tend to be more expensive.), and deductibles (the amount you pay up front if you make a claim. Generally, the lower the deductible, the higher your premium.)
  3. Ask About Discounts: Just as with conventional homeowners insurance, you can save money on a renters policy by bundling your auto insurance with the same company, or by adding security systems, deadbolts, or smoke detectors to your apartment. You might even earn a discount for being a nonsmoker. Discounts vary from company to company – be sure to ask.
  4. Comparison Shop: Always get quotes from more than one insurance company, and compare them closely before signing a contract. Sometimes one company may offer more coverage for less money, but offer less flexibility.

While these tips are excellent advice, don’t let the comparisons bog down making a decision. Renters insurance can’t help you, if you don’t actually have it.