If you are living in a rented apartment or house or you are planning to start renting soon, you should get familiar with renters insurance. There are two types of people out there when it comes to renters insurance: those in favor of it and those who think it is a waste of time and money.
If you are in the second group, we’d like to ask you a question: Do you like your belongings? If your answer is “Yes” and you want to protect your electronics, furniture, clothes, and other dear possessions, then it is time to purchase a renters insurance policy.
However, for the unacquainted, there are some things to keep in mind before buying a policy. Learn all about them below or take a look at the ultimate guide to renters insurance coverage by Lemonade for a more in-depth approach.
Pick the Right Coverage Amount
An important thing to consider when choosing a renters insurance policy is the coverage amount. The purpose of renters insurance is to cover the cost of your belongings in case there is a fire, natural disaster, theft, or any other accident.
We advise you to start by listing all of your belongings and determining their material value. However, keep in mind that renters insurance should also provide liability coverage. It should protect you if someone gets injured or their property is destroyed at your home. Renters insurance limits range from $100,000 to $500,000; make sure to decide what amount is right for you.
2. Bundle Your Insurance to Save Money
Do you already have existing insurance policies? Bundling your renters insurance with an existing insurance policy can help you save money. Insurance companies usually offer big discounts when you purchase several insurance policies from them, so that is not something to be overlooked.
For example, if you own a car, then you certainly have a car insurance policy. Ask your car insurance company whether they also offer renters insurance and what rates they have. The discounts usually range from 10% to 20%, which is not a trifle by any means.
3. Understand what Is Covered and what Isn’t
Most renters insurance policies out there are not perfect and do not cover all types of unfortunate events. When purchasing an insurance policy, you should consider what the biggest risks are in your case. Is it fire, flood, theft, earthquake, or something else?
For instance, many insurance policies do not offer coverage in case of earthquakes or floods. Therefore, if you live in an area where these are the biggest risks, you might need to buy an additional policy to protect yourself. Thus, before purchasing a policy and receiving a quote, make sure to ask for a detailed explanation of what is covered and what is not.
4. Choose a Higher Deductible
The deductible is the amount of money you need to pay out of your pocket when you file a claim to receive money from insurance. Depending on the insurance company and your insurance policy, your deductible might be anywhere between $200 and $1000.
So, why should you choose a higher deductible? The higher your deductible, the lower your monthly premiums will be. Therefore, in the long run, you will manage to save money. If you decide to opt for a higher deductible, make sure that you have that money ready in an emergency fund in case you need it.
5. Different Coverage Types to Keep in Mind
When buying renters insurance, there are two types of policies that you should have in mind. Those are:
- Replacement Value Policy
- Cash Value Policy
A Cash Value Policy takes into account the depreciation in the value of your belongings when determining the value, so your premiums with this policy should be much lower. However, if you end up filing a claim, you may not get much for your money.
The Replacement Value Policy pays you the claim based on what your belongings would cost if they were bought at the time of the accident. However, the premiums for this policy are usually much higher.
Therefore, when purchasing renters insurance, you should consider which option suits you and your belongings best.