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How Ignoring Renter's Insurance Could End Up Costing You Thousands of DollarsBy Alejandro Micheals
Alejandro studied finance in college and now writes freelance columns about personal and professional finances.
You probably wouldn't consider going a day without having adequate health or car insurance due to the amount of money you'd be out if you suddenly came down with a serious illness or were in an accident. But what about protecting your possessions? Renter's insurance will cover the monetary loss of possessions should you have a break-in, fire, or other damage done to the property that you are renting. While many people tend to think of this as an extra, unnecessary policy, the cost is a small price to pay in order to have the peace of mind knowing that you are properly insured.
Insurance for renters is not expensive and it's a must have, even if you need to make a budget cut in order to afford it. Say you have a $1,500 entertainment system that gets stolen. If you're not insured, it's up to you to find the money to replace it. On the other hand, if you are covered, you'll only pay the deductible and then your policy will cover the rest. Or, what if your child's friend is over for a play date, jumps off the swing, and breaks his or her arm? You'll be very glad that you have insurance to cover those medical expenses, which easily exceed the monthly premiums that you pay.
What Is Covered by Renter's Insurance?
Be sure to read your policy to get the specific details in regards to the coverage of each item, but a typical policy covers:
- Damage to personal property due to fire or wind
- Accidental damage to property, which belongs to others, while in your home
- Personal liability if you are sued due to accidental injury to others in your home
- Living expenses if you are forced to evacuate while your home is being repaired due to damage covered by your policy
You are also able to purchase additional coverage for disasters such as floods and hurricanes if you live in a high-risk area. Add-on policies can also be bought if you have large collections or valuable items for which you'd need a higher payout in the event of theft or damage.
How Much Renter's Insurance Do I Need?
A good rule of thumb to use in order to calculate the amount of insurance you need is to take an inventory of your home and add up the cost of each and every item that you'd need to replace if it were stolen or destroyed.
While you may not think your stuff is worth much, especially if you're a college student or you've just moved out on your own, you'll probably be surprised at the value of the items which you own. Glen Craig at Free From Broke says that unless you have enough cash on hand to buy replacement items, you really do need a renter's insurance policy.
As the adage goes, it's better to be safe than sorry. You'll never regret that you were covered in the event that you need to make a claim. But how will you feel when your valuable DVD or jewelry collection is stolen? Or when your neighbor slips and falls on the icy steps?
A few hundred dollars spent on insurance will save you thousands of dollars in potential bills should the unfortunate occur. Also, the peace of mind it will give is priceless. Make time today to purchase renter's insurance to better protect your belongings.
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