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Home What is Renter's Insurance? Home renters insurance for new renters

Home renters insurance for new renters

Most homeowners know that they will need to purchase a homeowners insurance policy to cover their property in the event of a disaster, but what about renters? Contrary to popular belief, the landlord's insurance policy will not cover the personal effects of the renter. Should there be a fire or theft in the home, anything taken, damaged or destroyed will be paid for by the renter. The homeowners policy only covers the building itself and not the contents within. Not having home renters insurance only puts the lessee at a high risk for paying to recover any of his lost or stolen property.

A column from USA Today described the wide gulf of those with renters insurance and those without. According to the article, nearly 2/3 (64.4%) of those renting property risked not having insurance. This data included both home and apartment tenets. The article, based upon data from a telephone survey conducted by the Independent Insurance Agents & Brokers of America (IIABA), showed that those who voluntarily did not purchase home renters insurance cited the expense as the main reason, but according to the IIABA, home renters insurance for the average tenet can be as little as $12 per month, with slight fluctuations due to externalities  in the greater marketplace. This tiny investment can save thousands later.

Those looking for home renters insurance need to make a careful assessment of their possessions. This can be done by taking a video camera and conducting a survey of the house, showing all of the goods inside. Still photographs and a written list of everything which might need replacing should also be made and kept in a fire proof box or safety deposit box. With this list of possessions in hand, the renter can begin to comparison shop for home renters insurance. The prices will vary widely depending upon the company and what is covered, but there are ways to cut costs without cutting coverage in any policy.

Home renters insurance is divided into two main types for compensation: to replace the cash (depreciation) value of the materials lost or to pay for the replacement of the items at the current market price. Cash value policies have lower premiums (payments), but the renter will likely not be able to recover as much compared to a replacement value policy. For instance, a 5 year old computer that was originally bought for $1000, but now has a resale value, including depreciation, of $200. A cash value policy would only pay $200 for the loss of the computer, but a replacement would pay the cost of the same computer at the current price. Additional coverage might be needed if the renter owns a more electronic equipment, jewelry, or other expensive items not covered by the original policy.

Most purchase home renters insurance with broad coverage that will likely cover liability, damage from fire, theft, flooding due to plumbing problems, and weather events. Comprehensive coverage will have additional coverage to pay for loss or theft due to anything not excluded.  Flood insurance is separate from both types of home renters insurance and it must be purchased through the Federal Emergency Management Agency (FEMA). This is recommended for all renters, but especially those in flood prone areas whether they have broad or comprehensive coverage.

Home renters insurance should not be considered a monthly burden, but it is an investment in protecting personal property against loss or damage from life's unexpected events.