If you are moving into your first apartment or helping your college-age kids move out on their own, you may have a long list of things to take care of. Don’t forget about renter’s insurance amidst all of the other tasks. Before you purchase a policy, you should learn a few basic facts about it.
What Renters Insurance Does
Renters insurance is similar in many ways to homeowners insurance. It covers you for liability if someone is injured while in your home, including from dog bites by your pets. This policy pays the medical expenses of the person injured and your legal expenses if you are taken to court.
Your policy also pays for replacement of your personal items if they are damaged in a fire, theft and other situations. While a landlord’s policy will pay for repairs or replacement on the building, it will not cover your items. It also pays for extra living expenses while you are away from your apartment because of damage. It also pays for replacement of other people’s belongings if you are found at fault for damage.
What You Need to Know About Your Policy
When choosing a policy, make sure you know of any exemptions. For example, if you have any items of value, you may need to pay for additional coverage. This includes electronics, which may be worth more than standard value. Find out how much coverage you have with the basic policy and then determine the actual value to decide if you need to add more.
Two terms that you will hear and should be understood are “actual cash value” and “replacement cost.” These mean two very different things and have a big impact on how you replace any damaged items.
- Actual cash value refers to the worth of the item, which depreciates over time
- Replacement cost is how much it would cost you to replace an item at today’s value
To understand these terms and the impact they have on you, here is an example. You have a sofa that is damaged in a fire. It is not a new piece of furniture and is only worth about $200. If you have a policy that pays you the actual cash value, you will receive payment of $200 for the sofa. If you have replacement cost, your insurance will pay the price of a new sofa similar to the one you had. You may find one in a store for $700 and receive a check for that amount.
When taking out a policy for renter’s insurance, make sure you understand what coverage you have. Sometimes the cheapest policy does not provide enough coverage if you should ever have to file a claim. If you have questions about the policy or any terms or prices included, ask your agent to explain it to you.
Renter’s insurance is an important policy to carry, and you want to understand what you are paying for.
This is a guest post by Creed Anderson on behalf of ASA Insurance. ASA Insurance provides excellent coverage for car and home insurance in the Salt Lake City area with the lowest rates to the English and Spanish communities . Affordable rates and superior service for all home, auto and business/commercial insurance needs.
