'What's Renters Insurance?" - What You Should Know

If you don't understand your renters insurance policy you run the risk of losing your possessions if you don't have enough coverage, or paying too much if you have too much coverage. Here are simple explanations of renters insurance coverages so you can decide what you need and what you don't.

What's Renters Insurance?

Renters insurance covers damage or loss to your personal property caused by fire, lightning, explosions, storms, theft, vandalism, and water damage from plumbing. It also protects you in case someone injures themselves in your residence and sues you.

How much renters insurance to I need?

There are four basic types of coverage to consider when purchasing renters insurance:

1. Personal Property Coverage - This covers your personal property such as clothing, furniture, electronic equipment, bicycles, etc. Most policies limit this coverage to a set amount, so if you own expensive items like jewelery, artwork, or collections, you should purchase optional coverage known as a "rider" to cover those items.

2. Liability Coverage - This protects you and your family against claims made by another person for personal injury and property damage. If you don't have a lot of assets you can carry the minimum amount of liability coverage, but if you do have a lot of assets you should increase this coverage, or get an umbrella policy to cover them.

3. Additional Living Expenses Coverage - This pays you to live somewhere else if your residence becomes too damaged to live in. Most insurers cover you for 30% to 50% of the value of your policy, so if you have a $100,000 policy you'll be paid up to $30,00 to $50,000 for your additional living expenses.

4. Flood and Hurricane Coverage - Most renters policies do not cover you in case of flood or hurricanes, so if you live in a flood-prone or hurricane-prone area, consider purchasing this coverage.

Posted by: Brian Stevens Posted on: March 16, 2007


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