Whether you're living in a rental temporarily or over the long term, renter's insurance is a vital coverage for you and your family. Here are two key ways this type of insurance protects you:
Your personal possessions. Renter's insurance will replace your personal possessions in the event of a burglary, fire, tornado or other covered disaster. As with homeowner's insurance, renter's insurance does not cover floods or earthquakes. You will need to purchase separate coverage for these two types of losses.
Make sure you have a coverage limit high enough to replace all your property, including furniture, clothing, electronics, appliances, etc. in the event of a total loss. It is best to have a policy that will pay replacement cost rather than the actual cash value of your property. The cost of the replacement cost coverage does not add much to your premium.
The policy will usually provide coverage for your property while away from your home also. So, if property is stolen from your car or while you are on vacation, that would be covered too.
There will be a deductible on this coverage, typically $500 to $1,000. That is the amount you will pay before the insurance kicks in for a covered loss. The higher the deductible, the lower your premium will be.
There are coverage limits for some types of property, like theft of jewelry and firearms, so you may need additional coverage for some specific types of property or collectibles. These can often be added on a "floater" for an additional premium.
Your financial resources. Liability protection is an important part of renter's insurance. This type of coverage protects you in the event that you, your child or pet injures someone else or damages their property. Without liability coverage, your financial resources can be wiped out in the event of a lawsuit. Most policies include this coverage with a $100,000 limit, but this limit can be increased if needed.
Here's another way renter's insurance protects you: If the home you're renting is destroyed by a disaster that your policy covers and you need to live elsewhere, renter's insurance provides living expenses. Some policies include this coverage with a dollar limit, while others provide the coverage for a set time period. Without that coverage, the cost of temporary lodging and other expenses can really add up.
This coverage is affordable. A typical premium for a renters policy is about $200 to $300 a year. This is a small price to pay for the peace of mind this coverage will provide. You will be happy that you have the coverage if it is ever needed!