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A quick look at home renters insurance

Just because you rent your home doesn't mean it's wise to go without insurance

Most people are familiar with homeowners insurance, but renters insurance is much less common. Even those who rent their home and have heard about renters insurance don’t necessarily understand why they should have it. That’s usually due to the fact they assume the landlord will have insurance that covers the property.

This may be true in some cases; however, it most definitely will not cover your possessions. In fact, nearly every rental contract ever created expressly states you are responsible for you and your belongings. That means paying out of pocket if you don’t have renters insurance.

Overview of home renters insurance

While what is covered by home renters insurance does vary, most policies will protect against loses due to fire, lightning, vandalism, theft, explosion and similar scenarios. Protection against flooding is less common, although some insurance companies do cover it. That being said, you may be looking at more expensive monthly payments or higher premiums.

There are a few instances that are not covered by renters insurance. These include:

Types of coverage

Actual cash value

Actual Cash Value (ACV) coverage pays for what the item is worth during the time that it was damaged. For example, if your old school, tube television was stolen, ACV coverage pays out its current price, which is probably nothing, not the price when it was bought. This is usually the cheapest option for renters insurance.

Replacement cost

Replacement cost renters insurance is recommended for those who own high value items. If something happens to an item, it will pay out its original price.

Do I need renters insurance?

It’s always a good idea to have renters insurance if you are renting a property. On the other hand, there may be a few instances when it isn’t absolutely necessary. If you are a recent college grad living in a studio that only has a bed, television and Xbox, it might not worth the cost and trouble. Before getting a quote on renters insurance, take a personal inventory of your rental property to see how much value is there.