5 Tips To Remember Before Buying Renters Insurance

Posted by: TheGuarantors on July 29, 2021

Whether you rent an apartment, condo, or just a room, buying renters insurance is a wise investment. Renters insurance typically refers to an HO-4 policy, and it is designed to protect you and your personal belongings. Renters insurance helps replace your belongings, protects you from liabilities, and also pays for your temporary accommodation if you get displaced from your damaged property. All of these benefits will only cost you roughly $200 a year in the U.S.!

Paying for renters insurance

So, you're ready to buy renter's insurance but don't know where to get started; we've got you covered! Let's take a look at some tips you should keep in mind before buying renters insurance.

1. How much insurance coverage do I need?

Insurance companies offer hundreds of different policies that can boggle your mind! Figuring out the right amount of coverage depends on several factors, and we have made an easy checklist for you below. This will help you figure out the ideal renters insurance for you and come in handy during insurance claims too.

Make a detailed inventory of all your essential belongings.

Make an inventory of your belongings that includes details such as when you bought them, how much you paid for them, and what they could be worth today. Add them up, and you'll have a good idea of how much coverage you need. If you have rare and high-valued items like antiques, fine arts, and expensive jewelry at home, it is recommended to have a floater or schedule to protect them.

What is peril coverage and what kind should I get?

Any event that causes damage to your property is a peril. We recommend you do a danger assessment of your neighborhood before buying your insurance. Your renters insurance usually covers only 16 named perils. However, many insurance companies also provide all-risk policies that cover more losses. It may look like an extra expenditure, but depending on the risks where you live, it can be well worth it!

What if my rental property gets damaged and I have nowhere to live?

Most renters insurance covers your additional living expenses (ALE), which pays for your temporary housing and meals and much more. In most cases, your policy should reimburse your bills that exceed your everyday living expenses. Most policies cover ALE at about 30% of your perils coverage.

2. Liability Coverage: Renters Insurance or Umbrella Insurance

A significant benefit of getting renters insurance is the [personal liability policy. You never know when a guest can get injured at your house, or perhaps your pet has damaged your neighbor's garden. Liability coverage can help pay for a guest's medical bills. It covers any damages you cause to another person's property and legal expenses if sued.

Tenant's insurance comes with liability coverage ranging from $100,000 to $300,000. The coverage you require boils down to your need and budget. However, you should consider a higher coverage if you have pets or rent in a posh neighborhood. If you require higher coverage, you should look into umbrella insurance. You get significantly better protection from lawsuits, damage repair, and medical bills.

3. What does my insurance exclude?

You need to know what isn't covered by your insurance. Your policy will list out a bunch of named perils, but it won't cover everything. For instance, most renters insurance excludes floods, hurricanes, earthquakes, and pest infestations from their list of threats.

In most cases, you have to buy additional policies to cover these events. Be sure to ask your insurer what is covered and what isn't before agreeing to a policy.

4. Bundle your renters and auto insurance for a discount!

You can easily save a few bucks by bundling your renters insurance and auto insurance together. Insurance companies offer attractive deals by providing you a multi-policy discount. You can easily save up to 10% of the premium rates! It also makes managing your insurances easier by bringing them together.

5. What should I know about insurance claims?

By now, you have a clear idea of what you can expect from your insurance. The best renters insurance not only provides you great premium rates and fancy deals, they should also make your claims process smooth. Your insurer will ask you how you want to be reimbursed when you file your claim.

Actual Cash Value pays for the depreciated value of the items listed in your claim. The replacement cost policy will replace your items at the current market cost. The latter attracts pricey premiums, but it's the best bang for the buck.