How Much Renters Insurance Do You Need?

Want to know how much renters insurance you need to protect yourself, your loved ones, and your personal property? Here’s what you need to know …

Renters Insurance

Renters insurance is actually three insurance policies in one. It insures your personal property, provides you with personal liability protection, and it covers you if your home is uninhabitable and you need temporary living quarters.

How Much Renters Insurance Do You Need?

Personal property coverage – pays to replace your personal possessions when they’re stolen, or when they’re damaged or destroyed by fire, smoke, vandalism, plumbing leaks, or bad weather.

Expensive items such as jewelry, silver, furs, antiques, and collections are only covered up to a certain amount, so you may need to purchase additional insurance for them. Also, damage caused by flooding and earthquakes is not covered, so if you live in a flood or earthquake zone you’ll need to purchase additional insurance to cover these disasters.

To figure out how much coverage you need, take inventory of everything you own and use the total value of your possessions as your amount of personal property coverage. Keep your inventory and sales receipts in a safe place so if you need to file a claim you’ll have a record of what you own.

There are two types of personal property coverage:

* Replacement cost coverage which pays to replace your possessions.

* Cash value coverage which pays to replace your possessions minus a deduction for depreciation.

If you want total protection you need to purchase cash value coverage.

Personal liability coverage – pays for another person’s medical bills and property damage expenses when you, your family, or your pets injure that person or damage his or her property. It also pays your legal fees if you’re taken to court.

You want enough liability coverage to protect your assets in the event that you’re sued. Most people opt for $100,000 worth of coverage, but if you have a lot of assets and investments you want to protect you can purchase additional coverage.

Loss of use coverage – reimburses you for any expenses you incur above and beyond your ordinary living expenses when your home is being repaired because of fire, smoke, plumbing leaks, vandalism, or bad weather. It covers your hotel, motel, and restaurant bills, plus other expenses that exceed your normal living expenses.

Standard loss of use coverage is 30% to 50% of the amount of your policy. So if you’re insured for $100,000, your insurer will pay your living expenses up to a maximum of $30,000 to $50,000.