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YOUR COMPLETE GUIDE TO RENTER’S INSURANCE

Q: I’m thinking of purchasing a renter’s insurance policy. What do I need to know? 

A: Purchasing a renter’s insurance policy is a good idea, but the options can be renter-insurance-policy-.jpgconfusing. 

Renter’s insurance provides coverage against financial responsibility and liability in the event of an accident, theft or natural disaster. Premiums are fairly cheap and the payoff can be tremendous. 

If this sounds like something you may want to consider, read on for all your questions about renters insurance, answered. 

Should I choose replacement-cost coverage or actual cash-value coverage? 

Replacement-cost coverage will fund the replacement purchase of a damaged or stolen object. This type of coverage will have pricier premiums, but is usually worth the extra expense. Actual cash-value coverage, on the other hand, has lower premiums, but offers only the cash value of the item at the time of the disaster. 

How much coverage do I need? 

Each policy will offer coverage to replace your possessions up to a certain limit. It’s best to take out a policy that will protect the full value of your belongings. 

To determine how much coverage you need, take an inventory of your assets. If you’re choosing a replacement-cost plan, note how much it would cost to replace each item. If you’re going with a cash-value plan, note each item’s current worth. Tally up the total and choose a policy that provides sufficient coverage. 

Are all disasters covered in renter’s insurance? 

Most policies will cover damage caused by a wide range of circumstances including fire, theft, windstorms and more. However, most policies will not cover damage caused by floods and/or earthquakes. If you live in an area that is prone to such happenings, consider purchasing a separate flood or earthquake policy. 

Should I choose a lower deductible? 

Many people choose a policy with a lower deductible, but that is not always the smartest choice. A high-deductible policy will give you a lower monthly premium. The amount you save each month will likely offset the cost of the higher deductible if you need to file a claim.  

Do I need a floater? 

A floater (also known as a rider) will provide additional coverage for pricier items if they are lost or stolen. Most policies include a cap for replacing a specific kind of item, including expensive jewelry, furs, collectibles and costly sports equipment. If you own such items, you may want to add it to your policy. 

What kind of liability coverage does my policy offer? 

Your renter’s insurance will offer you liability protection against lawsuits for bodily injury or property damage caused by you, your family members or your pets. This coverage will pay for legal counsel in a court of law and medical coverage for anyone who gets injured on your property. 

What is ALE? 

Additional living expenses (ALE) refer to any extra expenses you may have, such as hotel bills and food costs, if your home is destroyed or unlivable because of a disaster covered in your policy.