What Kind of Renters Insurance Policy Do You Need?

When it comes to renters insurance policy, it isn’t a question of whether you need it – you do. The right questions to ask are: “ which kind of renters insurance do I need?” and “how much renters insurance is enough?”

Your landlord has property insurance to cover his assets. It does not cover your clothes, computer or stereo equipment or personal belongings. Those are your things and your responsibility. If the building you live in burns down, falls down or blows away, You will be looking at replacing everything that was lost or irreparably damaged out of your own funds. Worse, if you, or a family member or visitor to your home caused the damage, you could also be liable for some of that cost. For instance, if your toddler flushes a sock down the toilet and it floods the house or you set fire to the kitchen with microwave popcorn – you could be held accountable.

When looking for renters insurance, you’ll most likely want a standard HO-4 policy. This will typically cover replacement of your personal property for 17 common types of peril including:

  •  Fire or lightning and resulting smoke damage
  •  Explosion
  • Aircraft and vehicles
  • Windstorms and hail damage
  • Civil disruption (like a riot)
  • Malicious mischief and vandalism
  • Falling objects (like tree limbs)
  • Damage caused by the weight of snow or ice
  • Damage caused by glass that is part of the structure
  • Damage caused by electric surges
  • Damage caused by water from home utilities
  • Volcanic eruption (hey, it could happen)

Some renters policies will also cover the cost of temporary living expenses if your place is uninhabitable. They’ll also provide a minimum amount of liability coverage to protect you if somebody is injured while in your rental unit.

How much renters insurance do you need? To answer that you’ll have to spend some time really thinking about what you own and what it would cost to replace your stuff if it were stolen or destroyed. If you have valuable jewelry, collectibles, high end computer equipment and other special stuff, you’ll probably need a rider to your renter’s policy or a standalone policy to cover it. And, if your renters insurance policy gives you a choice between actual cash value and replacement cost value, take the replacement cost value (less deductible). It will cost a little bit more, but if you have to file a claim, you’ll be reimburse for the cost to go out and buy another whatever at today’s price. In any event, a standard renters insurance policy shouldn’t set you back more than a couple hundred dollars a year, and most insurance carriers will let you pay your premium in installments. You may also qualify for renters insurance discounts if you have multiple policies with the same company (like your auto and renters together), have home security and safety equipment or are over 55. Be sure to ask about discounts.

And, just in case you still doubt that you need renters insurance, consider this scary stat from the U.S. Department of Justice: nationwide, rented residences are burglarized at a rate that is 79% higher than owned residences. That’s data from 2001. With the shaky economy, the number could be much higher.


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