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How much renters insurance do I need?

How Much Renters Insurance Do I NeedIf you are wondering how much renters insurance you will need, you should purchase enough coverage to pay for every item that you own. That’s right, you need to assess the total cost of all of your possessions and you will then have the total amount you should have.

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Many people don’t realize just how valuable their possessions are. Not in terms of millions of dollars as a general rule, but the total value when you start adding in all of the little things and considering all of the items that you have owned for years and years.

From bicycles to knick-knacks, you should consider their monetary value (sorry, renters insurance doesn’t cover sentimental value) and add that to your total coverage.

Read on to discover what type of renters insurance you need to buy, how to determine the value of your possessions and how to select the right insurance company for your renters insurance.

The Best Type of Renters Insurance

Normally there is no way to determine what is best for a person in terms of the insurance they purchase. Typically, there are too many factors to simply say everyone should purchase this type of health insurance or that type of auto insurance . With renters insurance, the choice is easy. If your insurance company offers it, purchase Replacement Cost Coverage insurance; if they don’t offer it, find a different insurance company.

Your other choice is called Actual Cash Value coverage.

This coverage is just what it sounds like. It offers the cash value of the item that you have lost at the time that you lost it.

renters insurance necessaryTo make things clearer, let’s talk about your computer. Perhaps it is 5 years old and fairly outdated by today’s standards. You probably paid $1,000 for it new, however, it is only 1.1 GHz has 256 RAM and a 100MB hard drive.

On today’s market, it might be valued at $150 – $200. If you choose actual cash value coverage that is all you will get for your computer, today’s market value.

If, however, you decide to purchase replacement cost coverage versus actual cash value, then the insurance company will give you enough money to cover the cost of a new computer today.

Do you see the difference? With the cost of new things always increasing and the value of your older items forever decreasing in value, you need to ensure that your renters insurance can help you replace the items you have in today’s world, not yesterday’s.

The bottom line is that actual cash value coverage is less expensive than replacement cost coverage, however, rental insurance is so affordable, even purchasing the more expensive coverage is going to prove to be very reasonable in price.

Determining the Value of Your Possessions

The first thing you are going to want to do is inventory your possessions. If you think you’ll be able to do this all on one piece of paper, think again. For most people, until they start inventorying their possessions, they have no idea what they actually own. You will probably be shocked as your list grows and you realize just how much stuff you really have.

As you make your list, don’t add a monetary value to your items; simply list everything that you own.

Most insurance companies cover everything from TV antennas to toiletry items, so be comprehensive. No, you don’t have to list that you have half a bottle of shampoo, but you may want to list the type of shampoo you buy on a regular basis.

Once you have completed your list, go online and see if the item you have is still available for sale in a retail store. As you locate your item, list the retail price; never list a sale price as that will change. If something you own is no longer available, find the comparable item.

For example, if you own a Sony TV, then find another Sony TV and look for upgrades to your current decommissioned model or a model with the same or similar features.

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After you have located the prices for each of your items or a comparable replacement, add up the total; this is the total amount of renters insurance coverage you will want to purchase. Because renters insurance is so affordable, it is easy to purchase additional coverage to ensure that you can replace every item that you own.

necessary renters insuranceYou will also have to provide your insurance company with proof that you own each of the items you say you do. If you don’t have your receipts from your original purchase, then you can use photos or video to provide proof of what you own. You should also write down the serial number of any electronics that you own as well.

Just a quick note: It is easy to overlook important items without realizing it. For example:

  • Did you include your Christmas or other holiday decorations?
  • What about the tools and bicycles in your garage?
  • Do you have items in storage?
  • Do you keep any DVDs in your vehicle for when you travel?

All of these things need to be included in your inventory.

Choosing the Right Insurance Company for Your Renters Insurance

As mentioned earlier, you need to choose an insurance company that offers replacement cost coverage as an option for your insurance. If the $15 to $25 a month that it will cost for replacement cost coverage is too high, then you can choose any insurance company.

If, however, this amount falls within your budget, then go with a company that offers the best value to you in terms of coverage. Often, when you get a quote, many insurance companies will only offer quotes that include replacement cost coverage. Just make sure you read the policy carefully so you know what you’re getting.

Another consideration that you might want to make is choosing the insurance company that you already have auto insurance with.

Most insurance companies provide great discounts for multiple policies from the same company. Saving money is always a good idea, although you should get a quote from your insurance company first and then compare it with other companies to see if they are offering the best rate.

much renters insurance neededYou will also want some flexibility when it comes to choosing the amount of liability coverage you get. Most renters insurance policies automatically come with liability insurance.

You should have some options in regards to how much coverage you have to purchase. Since liability insurance protects you in case someone who doesn’t live with you get hurt, you don’t want to have too little coverage, but you don’t want to be forced to accept $100,000 in coverage either.

The best thing that you can do before you choose an insurance company is to get quotes from several companies so that you can compare rates. If you already have an insurance company, get a separate quote from them and then compare it to others to see who has the best options.

On this page, we offer a link to a free quote tool so that you can compare rates in an easy and obligation free way. Simply answer the questions and then see your instant quote. If you see something you like, click on the link and purchase your renters insurance.

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