No one wants to need insurance. The only time you need your insurance is in a disaster, but when disaster strikes insurance prevents further anarchy. This is especially true for renters, who account for 35 percent of households according to the National Multifamily Housing Council. Many renters assume that their landlord’s insurance will cover them during a disaster, and this assumption is usually incorrect. If you read that and panicked, you should be asking yourself if renters’ insurance is worth it for you.
Do You Have To Have Renters’ Insurance?
No, not technically. Renters’ insurance is different than car insurance; one is allowed to rent without insuring themselves. This does not mean that renting without renters insurance is a good idea.
What Does Renters’ Insurance Cover?
This part is pretty straight forward: in a disaster (fire, burglary, etc.) you usually lose at least a substantial amount of your possessions. Renters’ insurance helps pay for the replacement of most of these goods so the renter can recover from said disaster.
How Do I Know If I Should Purchase Renters’ Insurance?
Like any insurance purchase, it comes down to finances. Add up all of your existing assets (this site is a great place to help gauge the price of your belongings) and then investigate different renters insurance plans. See if the cost of your belongings are more than the cost of insurance. If so, renters’ insurance is a smart purchase. Be sure to take into account deductibles and “Loss of Use” elements.
“Loss of Use” Elements
If a disaster makes the space you are renting uninhabitable, “Loss of Use” pays for your living arrangements while the damaged space is repaired. Different policies usually have either a monetary or time cap for temporary living spaces, so be sure to know the details of the specific policy.
Are There Different Types of Renters’ Insurance?
Every policy has its quirks, but the two main types of renters’ insurance are Actual Cash Value (ACV) and Actual Value (AV). The difference between the two is that ACV takes into account the depreciation of your goods, while AV does not. ACV pays you the amount your goods were wroth now, while AV pays you the amount to replace them. Obviously AV is preferred to ACV, and is therefore more costly.
Are All of my Belongings Covered?
For the most part, yes, and again this depends on your exact policy. Some policies have a cap placed on belongings of higher value, mostly for goods like jewelry and electronics. If you want one of these expensive goods covered you will most likely have to purchase an additional insurance package.
If you are interested in purchasing renters’ insurance or many other types of insurance, contact the experts at TJ Woods Insurance Agency. We offer a free quote for all our different insurance types, and will protect you when you need it the most.
