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Renters Insurance: The Overlooked Policy

Green house in hands.

Moving into an apartment can be expensive. You have to pay the movers, possibly your first and last month's rent and most of your utilities all on the same day. So naturally, buying renters insurance is the furthest thing from your mind. But if all of your possessions are destroyed in a fire or stolen, no one is responsible for the your property but you.

If you think your landlord's insurance will take care of it think again. The landlord?s insurance only covers the building, not what's inside the building. And the same applies to military housing. The federal government provides minimal, limited coverage to your personal possessions if they are damaged or stolen from your quarters, according to an Educational Foundation report. What's more, if you have a fully furnished one-bedroom apartment, replacement costs average between $35,000 and $40,000.

If you're considering coverage here are few options to choose from:

Personal Property Coverage

The first part of a renters insurance policy is called Personal Property Coverage. It covers your personal belongings. Property coverage may be considered "named perils" or "all risks."

  • Named peril policies cover property that is stolen or damaged by a cause named in the policy.
  • All risks policies pay for damages from almost any loss, except those specifically excluded.

When you buy a renters policy you choose an actual cash value policy or replacement cost coverage.

  • Actual cash value means the insurance company will replace your property minus a deduction for depreciation.
  • Replacement cost coverage means the company will pay to replace your property without depreciation -- the price you would pay to replace it today. Replacement cost policies will always cost slightly more than actual cash value polices, because insurance claims filed on replacement cost polices usually cost the company more than those filed on actual cash value policies.

Liability Coverage

Liability coverage pays for medical payments for injuries or damage to individual or property that you are legally responsible for.

Possessions Inventory

To file an insurance claim, you must list everything you lost in a fire or theft. If you don't a make list and try to go off of memory, you will undoubtedly miss a few possessions and get a smaller payout from your insurance company.

Here are other suggestions for logging your belongings:

  • If your record your belongings, read off serial numbers of the items and the original price for all of them.
  • Keep all receipts. Some insurance companies require them for documentation.
  • Keep a master list of all of your possessions' serial numbers.
  • Keep photos of your belongings and serial numbers in a safe deposit box or another secure location away from your home.

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