Renter's Insurance

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Renters Insurance

Do you really need renter's insurance? You probably think that the total value of the items you own is less than it actually is, which puts you at risk of under-insuring yourself. When you sit down and assess the true value of each item you own individually, you will get a more accurate picture of what your belongings are worth. Perhaps you have around 50 Blu-Rays, which may not seem like much to you, but at $20 apiece, you have a collection worth $1,000 that you won't want to have to pay to replace in case of fire. You may practice safety, but you can't control your neighbors.

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The two types of coverage available to renters are actual cash value and replacement cost. Actual cash value coverage pays what the property was worth at the time damage or loss occurred and is the least expensive type of renter’s insurance available. Replacement cost pays the cost of replacing the items or property and is about 15% more expensive than actual cash value coverage. 

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It is wiser to opt for replacement cost coverage. It ensures that if, say, your couch is destroyed in a fire, you'll receive the full $1,000 you'd need to buy a new model, instead of the couple hundred dollars that your old sofa was worth due to depreciation. While replacement cost coverage tends to be slightly more expensive, the difference in premium tends to be negligible when weighed against the huge increase in coverage you get. 

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