Considering the state of the world at the moment, and perhaps a prolonged change in business operations and the way we choose to socialize, we might be in our homes far more than in the past. What used to be a refuge after a long day at work has become inseparable from your office. While you used to regularly meet people at a restaurant or bar, you might be hosting more or visit people virtually from your couch. These changes may inspire you to invest more to make your home more comfortable and support the needs that used to be filled outside your apartment.
All this makes protecting your assets even more essential. And a great and relatively inexpensive way to do that is by purchasing renters insurance. Whether or not you're purchasing additional furniture or electronics to get you through these times, the cost to replace everything you own would be considerable.
Think about it. If your apartment burned down and your furniture, TV, computer, clothes and kitchen supplies were destroyed, could you afford to replace everything? What if you were robbed and they just stole your big-ticket items, like your computer and phone? Could you afford to immediately replace them? How would you be able to continue working from home?
Renters insurance protects you from these scenarios. It covers the replacement of your property if your apartment is damaged or you're robbed.
Renters insurance is an extremely affordable type of insurance. While the cost of your policy depends on your coverage choices, limit, deductible, your location and the value of the property you're insuring, premium rates average $16 per month or $200 annually. But rates can be much higher for certain circumstances. For example, owning extremely high-quality stereo equipment or living in a dangerous neighborhood with lots of reported break-ins will certainly lead to a more expensive policy.
Most policies have a deductible of roughly 10 percent of your coverage, which averages to between $500 and $2,000. The best way to determine your limit need is to determine the cost of your essential possessions and make sure you're covered for the amount to replace them. Most one-bedroom apartments are insured for $20,000 in personal property with $100,000 in liability protection.
Insurers offer different types of policies with limited or expansive coverage. The cheaper policies are actual value and named perils. Actual value policies are less expensive because they only cover your property for the amount an item is worth at the time of the damage. For instance, if you paid $1,000 for your computer three years ago, you could only receive $600 since that's what the same item is valued today.
Additionally, named perils policies only cover damage specifically stated in the policy, so if you don't include fire damage, you won't be covered if your apartment burns down. Replacement cost and all-risk policies are more expensive but they cover the actual amount it would cost to purchase a new item and protects you from all scenarios aside from those specifically exempted.
Renters insurance coverage will pay for the replacement of your personal property if your apartment is damaged or if you're robbed. Additionally, it protects you in case someone is injured on your property. And finally, if you're unable to live in your residence as a result of the damage, renters insurance will pay for you to stay in a hotel until you can safely return to your apartment.
While the range of scenarios protected by renters insurance is extensive, there are certain exceptions that may require specialized policies. They include certain natural disasters, damage by pests and coverage for extremely expensive items. Additionally, your coverage only protects your property. That means that you can't share insurance with your roommate. And while renters insurance covers items inside your car, if your vehicle itself is harmed, you need car insurance to pay for the damages.
The longer you're prevented from going to an office and the more work you do from home, the greater risk to you personally. Activities that might otherwise be covered by renters insurance could be excluded if they're intertwined with your home business or freelance activities.
For instance, if you're working from home and leave some item or piece of equipment on the floor in your living room and your roommate trips and falls, you could be liable and renters insurance may not cover it.
A way to protect yourself from these potential risks is with general liability insurance. General liability insurance policies cover liabilities relating to business activities for the following scenarios: bodily injury, property damage, personal and advertising injury, medical payments and defense costs.
There are plenty of methods to try to save money on renters insurance. The first step is working with an independent agent who can assess your needs and direct you toward the insurers who provide the best coverage at the best price.
After that, you should identify your requirements and risks by considering your property and possessions. Then, reach out to your car insurance provider. Most auto insurance companies offer discounts by combining auto and renters insurance policies.
Most insurance companies offer renters insurance and their premium rates often vary considerably. Make sure your agent shows you quotes from at least three different insurance providers before you make your choice. After discussing your risks with your agent, confirm that your policy meets all your needs.
Additionally, some policies include discounts for taking certain protective measures like installing locks and smoke detectors. Speak with your agent and take actions to qualify for these rate reductions.
Renters insurance has become a bit more complicated in these trying times. Consider your day-to-day activities over these past months and think about how they'll change in the future.
Go through your possessions, and think about further purchases and make sure your policy will cover the cost to replace them in the event of a disaster. After that, talk to your agent and make sure you get the coverage you need.
HowMuch.net was born with one mission: “Understanding Money.” We create unique, beautiful, compelling and easy-to-understand guides and visualizations to help people make better financial decisions.