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Renters Insurance

When do you need renters insurance?

If you are moving into an apartment or leasing a home, you may be considering renters insurance. As with any type of insurance, there is always the chance that you could pay for it the entire time you are in your home and never need it. While some renters see it as a waste of money, those who end up needing it say they are grateful they had it.

According to the nonprofit group Insurance Information Institiute (I.I.I.), Houston, New York, Los Angeles and Chicago have largest percentage of renters in the US, but only 31 percent of those that rent have renter’s insurance. So what are the other 69 percent of renters missing out on?

“Renters insurance provides financial protection against the loss or destruction of your possessions when you rent a house or apartment,” pointed out Jeanne M. Salvatore, the Insurance Information Institute’s consumer spokesperson and senior vice president for Public Affairs. “While your landlord may be sympathetic if you experience a burglary or a fire, your possessions are not covered by your landlord’s insurance. The good news is that renters insurance premiums are relatively inexpensive.”

,In fact, the average renters insurance policy costs only $184 per year in 2009 (the latest year this data is available) according to the National Association of Insurance Commissioners. This is less than $16 per month.

By purchasing renters insurance, your belongings are covered against losses from fire or smoke, lightning, vandalism, theft, explosion, windstorm and water damage (not including floods). Like homeowners insurance, renters insurance also covers your responsibility to other people injured at your home or elsewhere by you, a family member or your pet and pays legal defense costs if you are taken to court.

There are two types of renters insurance policies:

1. Actual Cash Value – pays to replace your possessions up to the limit of your policy, minus a deduction for depreciation.
2. Replacement Cost – pays the real cost of replacing your belongings (regardless of depreciation) up to the limit of your policy.

If you have expensive jewelry, furs, sports or musical equipment, or collectibles, you may want to consider adding a floater to your policy. Most standard renters policies offer only a limited dollar amount for such items; a floater is a separate policy that provides additional insurance for your valuables and even covers them if they are accidentally lost.

At the end of the day, insurance is always a good idea. For few dollars a month, it is nice to have peace of mind when Murphy comes knocking. But don’t settle for the first policy that you find. Always shop around and make sure your buying from a credible provider. If you are still uncertain if renters insurance is right for you, check out the I.I.I.’s Renters Insurance Checklist to get more information