Do you rent an apartment or condo? If so, do you have renters insurance to protect your belongings and to cover you against liability claims?
A surprising number of renters don’t bother with insurance. Some assume they are covered by their landlord’s policy. Wrong! Your landlord’s policy usually covers only damage to the building and liability claims against the landlord. Other renters say their belongings aren’t worth enough to justify the cost of protection, but if you add up how much it would cost you to replace everything, you may be surprised. In most cases, the cost of insurance is a small price to pay for the protection you receive.
Renters insurance, sometimes called a tenant policy, typically protects against three things:
- Loss or damage to your personal belongings from fire, theft, etc.
- Liability claims from someone injured in your apartment
- The cost of temporary living expenses if your apartment is made uninhabitable by a catastrophe
When you buy renters insurance, you’ll have to decide the amount and type of coverage. Your agent can help you estimate the value of your belongings. You can either choose “actual cash value” coverage or “replacement value coverage.” Actual cash value coverage pays you the estimated value of items at the time of loss, based on their age and condition. Replacement value coverage pays the cost of replacing items with equivalent new items, up to the maximum value of coverage. The second method will pay you more, but the premium will be higher. Try to identify anything of special value, such as expensive jewelry or electronic equipment. You may need a policy rider to cover the full amount of these items.
A few tips
Bundle for discounts. You may receive a discount if you buy your renters insurance and car insurance from the same company.
Save with roommates. If you have a long-term roommate, ask if you can take out a joint policy instead of two separate ones.
Know when and where kids are covered. If you have children living away at college, check whether they’re covered under your homeowners policy. Once they leave college, they’ll need their own insurance.
Take inventory. Create a thorough inventory of your belongings, recording the model and serial number of any equipment, and take plenty of photos. Documentation becomes very valuable to support your claim if you ever have a loss.
As always, should you have any questions or concerns regarding your unique situation please feel free to call.
Andrea L. Blackwelder, CFP®, ChFC, CDFA® and Joseph D. Clemens, CFP®, EA are the founders and partners of Wisdom Wealth Strategies. Their shared passion is simple: to bring financial empowerment, understanding, and peace-of mind to people who wish to improve their financial future, build wealth for their families, and achieve financial independence. Click here to find out more about how you can work with the Denver Financial Advisors at Wisdom Wealth Strategies.