What is renters insurance?

There are a lot of people out there who are living in rented accommodation, which can be a house, a condo, an apartment etc. There are times when your company transfers you to a different location and at that time, you will go for a rental accommodation. In such cases, if an earthquake or fire causes destruction or damage then how can you get back your possessions? Of course in such case most people have to live with the loss but the next best thing to do is to get renter insurance. Renter insurance will provide the much required financial protection against these damages.

Although your landlord may be covered with homeowner insurance but your possessions will not be covered by the same insurance. Also renter insurance will cover only the value of your belongings and not the house or the apartment. If you purchase renter insurance then your belongings will be covered against damages due to explosions, vandalism, theft, fire, lightning, and windstorm. Renters insurance, just like home insurance, will also cover additional living expenses especially if your home or apartment has been damaged or destroyed by fire.

There are two types of renter insurance policies available for purchase and they are:

• Actual Cash Value – This is the value of replacing your possessions minus a deduction for depreciation. This value cannot exceed the policy limit.
  
• Replacement Cost – This is the value of replacing your possessions but there are no deductions for depreciation. This value cannot exceed the policy limit.

You can always purchase a rider with any of these policies. A standard renter insurance policy will provide a limited cover amount for your personal items like jewelry. So if you possess items, which are in excess of what your policy limit is then it is always advisable to supplement your policy with a rider. This will add the necessary protective coverage on the rest of the items. A rider is not a part of the standard policy; it is a totally separate policy, which will provide additional insurance coverage for your possessions. It will cover your possessions or valuables in case there is a loss.

The renter insurance and condo policies are cost effective and cost less than the home insurance policies. There are some factors that are not in your hand like the locality you live in or the construction material of the apartment but there are different ways to keep the premium as low as possible. You can always increase your deductible, which will bring down the premium amount. The deductible is the amount that you pay before your coverage starts. Different insurance companies offer different discounts hence it is always better to find out the information from various companies, compare the information and then purchase the policy that provides you maximum benefits. There are many insurance companies who will provide you discounts if your apartment or house has protective devices like fire alarms, smoke detectors etc. Most renter policies offer liability protection as a part of their coverage.