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How to Get Renters Insurance

After weeks of moving in, you've finally got your new apartment decorated and are planning a housewarming party. But while you're out buying party food, a pipe bursts, flooding the living room and ruining your brand-new furniture. You could be facing a big bill for replacing all that stuff—unless you have renters insurance.

Renters insurance protects you and the belongings in your rental property. You can get renters insurance through many insurance providers and may be able to bundle it with your auto insurance. The process will involve assessing the value of your belongings and answering a few basic questions to determine how much coverage you need. Keep reading to learn more.

What Is Renters Insurance?

In the example above, you might expect the landlord's insurance to pay for your ruined furniture. After all, it's their fault the pipe burst, isn't it? Unfortunately for you, the landlord's insurance covers the damage to their property—the pipe and the building—but not to your property. That's where renters insurance comes in.

Renters insurance generally includes three main types of coverage: property, liability and loss of use.

Property insurance pays to replace your personal belongings. This can include clothing, furniture and electronics that are stolen or damaged by a covered risk. Your policy could cover fire or smoke damage, theft or vandalism, lightning, windstorms and water damage that's caused by structural issues (that burst pipe, for example). Items may also be covered for theft outside your home, such as a laptop stolen from your car or your hotel room.

Renters insurance typically doesn't cover flood or earthquake damage; however, you may be able to buy separate policies for these. It also usually doesn't cover certain high-value items, such as antiques, expensive jewelry, computers or collectibles; you'll need to buy a separate endorsement or rider to cover these items.

Liability insurance protects you against liability if someone is injured while in your living space. If someone slips and falls in the lobby, they might sue your landlord, but if they slip and fall in your kitchen, they might sue you. Renters insurance generally covers legal costs and sometimes even medical costs related to an injury.

Some renters insurance policies also cover damage someone in your household causes to another tenant's property. For example, if your daughter breaks a neighbor's window while practicing her softball pitch, renters insurance may cover that cost.

Finally, loss of use coverage pays your living expenses if the property becomes uninhabitable due to a covered risk. For example, insurance would pay for you to stay in a hotel and feed yourself while your landlord repairs covered damage.

There's no law mandating that tenants carry renters insurance. Your landlord may, however, require you to have some level of renters insurance coverage in order to rent their house, apartment or condominium. Check your lease agreement to see if renters insurance is required and what level of coverage your landlord requires you to have.

How to Apply for Renters Insurance

Applying for renters insurance is easy to do. Most insurance companies sell renters insurance you can typically apply for online, by phone or in person by speaking to an insurance agent.

Before shopping for renters insurance, talk to your landlord and find out what types of safety measures they have in place. For example, living in a property that has a burglar alarm, deadbolt lock, smoke detectors, security patrol, doorman or sprinklers could lower your renters insurance premiums.

Next, assess the value of your personal belongings. Walk around the apartment, condo or house making a list of everything you own. It's a good idea to take photos as well, especially of your more valuable items; write down or photograph serial numbers if you can. You can also do a video tour around your space. Estimate how much it would cost to replace everything you own—you'll probably be surprised.

When applying, be ready to provide the following information:

  • Name, address and telephone number
  • Social Security number
  • Birth date
  • Marital status
  • Address of the rental property
  • Start date for the insurance (such as the date you'll be moving into the unit)
  • Whether you have a pet (dog bites are often not covered by renters insurance liability coverage)
  • Value of personal property you want covered

How Much Does Renters Insurance Cost?

How much you'll pay for renters insurance varies from company to company and state to state, and also depends on the amount of coverage you choose. In general, renters insurance is very affordable. The average policy costs about $180 annually, according to the National Association of Insurance Commissioners.

Factors that affect the cost of renters insurance include:

  • The coverage you need: If you have to insure a valuable coin collection, expensive musical instruments or other items not covered by a normal renters policy, you'll pay more. You'll also pay more if you buy earthquake or flood insurance to supplement your regular policy.
  • Whether you buy replacement cost insurance or actual cash value insurance: Actual cash value insurance pays you the current value of the item; replacement cost insurance pays you the cost of replacing it with a new item. For example, if your 5-year-old TV is stolen, actual cash value insurance would pay the average selling price for a 5-year-old TV. Want to be able to replace your old TV with a new one? Then opt for replacement value coverage.
  • Your deductible: Your deductible is the amount of loss you'll have to pay out of pocket when you file a claim. For instance, if $2,000 worth of property is damaged in a fire and you have a $500 deductible, the insurance company will pay you $1,500 (the claim amount minus your deductible). The higher your deductible, the lower your monthly premiums will be.
  • The relative safety of your property: If you're renting in a high-crime neighborhood, you'll likely pay more for renters insurance. Conversely, renting a property that's protected by fire alarms, deadbolt locks, smoke detectors and other safety devices can lower your premiums.
  • Multipolicy discounts: Many insurance companies offer discounts if you buy more than one policy. Getting renters insurance from the same company that handles your life insurance or car insurance could net you a lower rate.

Your credit score could also affect the cost of your renters insurance premiums. In states where it is allowed, insurance companies might run a credit check when processing your application. Lower credit scores could indicate you may have more trouble paying your premiums. If you're worried about your credit score impacting your insurance costs, check your credit score and review your credit report to make sure it's accurate.

Is Renters Insurance for You?

Renters insurance offers a lot of protection for a relatively small sum. When you think about how much it would cost to replace everything in your apartment or condo, you'll see that renters insurance is a pretty smart investment. For an average of just $15 a month, you could protect your belongings, protect yourself against lawsuits and prevent a potentially huge expense.

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