Renters insurance can be confusing, and costly, if you don't understand it. Here are renters insurance guidelines that will explain renters insurance in simple terms and show you how to get the best rate.
Renters InsuranceMany renters are under the impression that their landlord's insurance will cover them in the event of a fire or other catastrophe. Not so.
Your landlord's insurance only protects the building you live in, not your personal property. If you want to protect your personal property from being damaged or destroyed you need to get renters insurance.
What Renters Insurance CoversWhen you purchase renters insurance you're getting three kinds of coverage. They are:
Personal Property CoveragePersonal property coverage pays to replace your personal property in the event it's stolen, or if it's damaged by fire, smoke, vandalism, explosions, windstorms, or plumbing leaks.
To determine how much renters insurance you actually need, take an inventory of everything you own - clothing, furniture, appliances, electronics, kitchen utensils, tools, sports equipments, etc. Total up the value of your personal property and use that figure as the amount of your personal property coverage.
Some expensive items like jewelry, furs, and silver, may not be covered by a standard policy, so you'll need to purchase additional coverage for these items.
Additional Living Expenses CoverageAdditional living expenses coverage pays for you to live elsewhere when your home is uninhabitable and being repaired. It covers your hotel or motels bills, your restaurant bills, and any other additional expenses you may incur.
Standard additional living expenses coverage is equal to 30% to 50% of the amount of your policy. That means if you're insured for $100,000, your insurance company pays your living expenses up to $30,000 to $50,000.
Personal Liability CoveragePersonal liability coverage protects you from lawsuits when you or your family are found liable for injuring someone or damaging their property.
The amount of liability coverage you need should be enough protect all your assets if you're sued. Most people get $100,000 worth of liability coverage, but you can buy more if you need it.
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The author, Brian Stevens, is a former insurance agent and financial consultant who has written a number of renters insurance guidelines.
