Do You Really Need Renter's Insurance?

My dad told me, "I always have insurance for renters when I was at school and I got my first apartment." And I quickly put this bit of parental advice out of my mind, like most college children.

Big error.My apartment, when I returned from winter break, was broken in – my TV, computer and other personal things were gone. And the bill to replace them slapped me.

During your move to a new location will also be a task in itself, please do not forget to ensure that you are covered and protected if an emergency occurs. Don't you know exactly what you need or even have issues about your insurance policy? We have answers.

Why do I need renter’s insurance?

Most apartment complexes and landlords have just a covered protection that leaves everything — electronics, furniture, clothing, everything — exposed to harm to the actual dwelling. You need your own policy called a HO4, or a renters insurance policy to cover your belongings in the event of fire, theft or injury. (Unless you have the resources, of course, to substitute all for your own!)

You also want liability provisions for negligence-related losses. For example, if you leave the kitchen sink unintentionally and it overflows into the next door, then you may be held responsible for the damage—and expected to pay for damages, accident-related medical expenses, and defense costs if they bring you a lawsuit. Those expenses will be covered by renter's insurance.

No, none of this is fun to think about, but trust me, before it really happens, it is much easier to prepare (and to pay for it).

What exactly will my policy cover—and what won’t it?

Personal Property

In case of electricity spikes, damage to water, fire, vandalism, robbery or other accidents, most regular insurance policies of renters give you cover for your property. However, damage caused by floodwater, earthquakes, mudslides and nuclear risks is mostly not protected. Speak to your insurance provider about having a separate policy if you live near a failure line or water or are worried about those risks.

Bear in mind that the insurance company can only cover specific types of property, e.g. $2,500 for electronics and $1,500 for jewellery and furs. Thus you should consider buying a personal product policy if you have an engagement ring, your custom machine or even an expensive collection of golf clubs. These additional supplements to the insurance of the renter are usually cost-effective, but you can cover some very valuable things, which would cost you a little more to repair.

Loss of Use

Your insurance also includes your cost of living if you have to leave your home after an accident. Tell your roof that a tree collapses and repairs are needed before you are able to live again—loss of use will cover a hotel, food, and any other expenses that you incur during that period.

Liability

You cover your liabilities, like your dog gets loose and bites to your neighbor's kid and he must get stitches, for serious harm and property damage caused by negligence.

But you are not covered by neglect for the expected or intended bodily injury (through a car park trying to hit your neighbor), business activities (for the cupcakes you bake in your apartment make someone sick with the poisoning of food — you need a policy from the owner of a car), or automotive damage or injury.

Additional Coverage

Besides the basics, there are a number of other forms of coverage. If a visitor suffers an illness in your house, the health insurance coverage under your policy is "hospital payments to others." Coverage from the credit card and bank forgery can defend against certain attempts at monetary fraud such as stealing your credit card or cheque book in order to charge or write cheques forged during a break-in. And 'Other Property's coverage replaces not just your items but others, if you borrow a laptop from a friend and a leaked pipe will ruin it, for example.

How much coverage do I need?

Many landlords require that their tenants have a liability coverage of at least $100k. Speak to an insurance provider to decide how much coverage you need if your host doesn't have the policy.

One of the first questions for property damage coverage is how valuable the stuff is. Although this seems a simple query, it can become tricky if you really begin to reflect on what it would cost to repair everything in your house. But a fair rule is $30,000 to $50,000 for flats and around $100,000 for homes and what fundamental policies protect.

More interesting, you can take pictures or videos of your place and your most important possessions even if you cannot put the dollar sign on everything that you have. In this way, you will have a record of things in the event of a disaster and can think of how much it is worth at this stage.

I need this! Where do I get a policy—and how much will it cost?

First, call the car insurance provider — if you combine all plans, you will get the most fantastic discounts. Check www.CompareInsurance.com if you do not offer the renter's policy or if you want to go shopping. A simple policy—that is $30,000 personal goods, a $100,000 personal property deduction, and a deductible of $500 or $1,000—would cost you just $10 to $15 bucks per month. Prices will depend upon state, responsibility cap, and personal property values.

And let's face it—this is a small cost to pay for the calmness it offers and the security you'd want you to have in a catastrophe. Just imagine, I could defend my college apartment at the expense of one meal a month.