What is Renters Insurance and Do I need it

Everyone knows that when you own a home, you need to insure it. But what if you’re renting? Unless you own a lot of expensive furniture and household items, there’s no point, right? Wrong! Renters insurance does a lot more than just replace stolen items. Here are some common scenarios where renters insurance can save your financial hide:

1. Your girlfriend’s mother slips and falls on the stairs in your apartment. She doesn’t like you anyway, so she decides to sue. Your renters insurance pays for your lawyer and your visitor’s medical bills.
2. A big tree comes down in a storm and crashes through the roof. That’s not your responsibility, of course. But where do you live while your home is being repaired by the landlord? Renters insurance will cover it.And what about the damage to your big-scree TV and stereo from the ceiling caving in? That’s not the landlord’s responsibility! Renters insurance to the rescue – again.
3. After days of heavy rains, you come home and find three inches of water on the floor. Your landlord’s insurance may not cover it, but a good renter’s policy will cover the damage and pay for you to stay someplace else until the apartment is livable again.
4. The airline loses your luggage, including all the souvenirs you’re bringing back from your vacation. Your Renters insurance covers losses while you’re traveling.

A 2008 study found a lot of renters were confused about insurance, especially its cost. Most respondents estimated it would cost about three times more than it actually does. Some other misconceptions about renters insurance:

• My landlord’s insurance will cover any problems. This is false. Your landlord’s insurance will cover structural damage to the building you live in, but it won’t cover the cost of repairing or replacing your possessions, or the cost of finding somewhere else to live while your unit is being repaired.
• I don’t own much so I don’t need liability coverage. This is also false. We live in a lawsuit-happy society. Even if you are not at fault, defending yourself can cost thousands – or even tens of thousands – of dollars. Your insurance can’t give you back the time and energy involved in a court case, but at least it will ease the financial burden.

Renters insurance is also surprisingly affordable – many of the study respondents estimated it would cost three times more than it really does! Before you contact a licensed agent for a renters insurance quote, you’ll need to gather some information. Inventory your furnishings, appliances, electronics, clothing, books, DVDs and other items. Your insurance agent can help you figure out what it’s all worth – you may be surprised at the total! Make a separate list of jewelry, computers, musical instruments and art. You’ll need a policy rider to cover them. Don't forget to take photos of all your valuables. Decide whether you want to insure your belongings for their replacement value or actual value. If you choose actual value coverage, you won’t get much for that five-year-old TV. Replacement value will cover the cost to buy a comparable new one. As with any insurance policy, there will be a deductible. The higher the deductible, the lower the monthly or annual premium will be. Every renter’s needs are different. A licensed, local agent can help you find the best policy for your circumstances.