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Do You Need Renters Insurance?


You may not feel like renters insurance is necessary. However, everyone who rents an apartment or house can benefit from this type of coverage.

Simon Winnall | Stone | Getty Images

Many people dismiss renters insurance, claiming that their belongings aren't valuable enough to insure. But a renter's policy covers more than just the contents of your home. It also includes liability coverage in case someone injures themselves on the premises or your landlord claims that you have damaged the property in some way.

Renters insurance typically covers:

Your personal belongings, even when they are not inside the home.Temporary living expenses, known as "loss of use," if the rental unit is deemed unlivable due to damage.Medical expenses if someone is injured on the premises.How much renters insurance do you need?Renters insurance typically has a $10,000 minimum for personal property. It's cost-prohibitive to over-insure your belongings, so calculate the cost to replace your personal items should they become damaged or stolen, and opt for additional coverage only when necessary.

Next, estimate the value of the property. If you have absolutely no idea how much the apartment or house is worth, ask your agent for a ballpark figure.

What else do you need to know about renters insurance?As with all types of insurance, lower renters insurance premiums equal higher deductibles. Although this may mean a little out-of-pocket cash for small losses, you'll pay less money each month and serious losses will be covered.

Because many policies only cover the cash value of your belongings and that 10-year-old couch is no longer worth the amount you initially paid for it, you may want to consider replacement-cost insurance, which pays out enough to replace damaged items.

Shop around for the best deal on renters insurance as costs vary from one company to the next. It's also a good idea to make an inventory of your belongings, including purchase prices and dates as well as photos and/or video of more expensive items, in case you ever need to make a renters insurance claim.

For more information about insurance, see Bankrate's Insurance Basics.