Review of Renters Insurance Policies

Renters must have insurance on the contents of the home they are renting. Although the landowner has insurance on the dwelling, their policy does not cover the renter's personal belongings in the dwelling. The insurance policy should cover all contents of the home in the event of any disaster, theft or vandalism.

When purchasing a renters insurance policy one important thing to consider is the type of coverage. The two main types of policies are Actual Cash Value and Replacement Cost. A policy that pays out actual cash value in the event of damage or theft is based on what the item was worth at the time the claim was filed. For example, if your laptop computer was stolen a policy that offered actual cash value may only give you a few hundred dollars if it is a year old or older. However, if you have a policy that pays out replacement cost, then you receive enough money to purchase a brand new laptop.

To ensure that you are adequately compensated for all of your belongings, you must take inventory of the contents of your dwelling. It is recommended that your inventory list is kept in a fireproof safe and if possible kept in a secondary location outside your home. The inventory list should include as much information about your items as possible such as serial numbers, photos and an estimated value. Copies or purchase receipts can also be useful to have in the event of a claim.

Aside from compensating you for damages or loss of contents, there are two other very important reasons for renters insurance. One is to protect you in the event that your home becomes unlivable. The insurance policy pays for you to live somewhere else while your home is being repaired. The other important reason is that renters insurance offers you liability protection in the event someone is injured inside your home. The policy covers their medical bills not to exceed the amount of coverage you have.

As with any other type of insurance, the cost of renters insurance is based on several factors such as location, amount of coverage/deductible and risk factors. It is not uncommon for discounts to be applied for smoke alarms and burglar alarms.