FRIDAY, MARCH 23, 2012
Approximately 1/3 of Americans are currently renting the homes they live in. Renting is appealing to students, young adults or those who don’t intend to stay in one place for very long. Some people prefer to rent if they can’t afford the down payment for a home or they may not qualify for a home mortgage. High school graduates across the country are counting down the days to their first apartment, but how can you be sure you’re protected while renting?
 Homeowners are required to carry homeowners insurance to protect the structure where they live. Landlords are required to carry insurance on the buildings he owns, but renters are not required to carry insurance of any kind. For this reason, renter’s insurance is often overlooked.
The insurance that your landlord carries only covers his buildings, not your belongings or your liability for accidents. So if your apartment kitchen catches fire or if your possessions are stolen during a break-in, a renters insurance policy will allow you to recover the value of your personal items lost. In addition to protecting your material possessions, renter’s insurance is liability coverage if someone is injured during an accident in your home.
Most renters are under the impression that they don’t own much, their belongings have no real worth and it’s not worth the cost to insure them. They maintain this line of thinking until everything they had was destroyed. Only then do they realize how much their “stuff” was worth.
The amount of renter’s insurance that you should purchase depends on your personal situation, net worth, and tolerance for risk. To help you determine how much rental insurance you should purchase, you should take some time to make a comprehensive list of everything you own and what it would cost to replace. This includes everything from clothes and jewelry to your bedding and spice rack. Don’t forget about electronics, cell phone, furniture, collectibles, etc. Be sure to include everything, even if you don’t think it’s worth much. Underwear is cheap, but if you lose every pair you have, you might be spending $50 just to get through the week.
After you make your list, assign a dollar figure to each item. This dollar figure should be the cost it would take to replace it, not the cost you could sell your items for. For example, if you have a television that costs $600 in the store, you might be able to sell it on your own for $400. This item should be given the $600 figure on your insurance inventory. If you’re not sure what something is worth, check online sites such as eBay, Craigslist or go to the store and see what it is selling for. You may be surprised at the total value of your belongings when you start adding up everything.
Once you have your end dollar figure, round up. It's a good idea to over-insure a little to account for inflation, things you might have forgotten or adjustments in pricing. Increasing your insurance will only raise your premiums a little, and will make certain that you can maintain your current standard of living even if disaster strikes.
Once you’ve purchased your policy, keep the list you made. If there is a loss at your house you’ll need that list to indicate to the insurance company what you lost. To ensure that this list doesn’t get destroyed in the case of a catastrophe, keep it on an electronic file, safety deposit box or other location outside of your house.
By Matt Reynolds - Google+
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