A New Leasee's Primer on Renters Insurance

By: Trevor Mulholland

Taking the leap and finally renting your own apartment also entails being ready for any emergency that may arise. If your first home is going to be rented, you need to look into all the kinds of insurance that will protect your property. Sure most residential buildings come with their own insurance policy, but these policies are not likely to cover certain occurrences - and that's where renters insurance comes in.

Renters insurance basically covers two things: 1) damage done to your property, and 2) damage you may do to others' property. In the case of damage done to your property, you can protect the items on your insurance inventory against unforeseeable trouble, such as flooding, earthquakes, vandalism or theft. This is why it is important to keep a detailed inventory of the items you want covered by your insurance. Especially important items, such as antique heirlooms or expensive jewelry, should be declared first of all.

One important thing to know is if your insurance company intends to reimburse your losses at "replacement cost" or "actual cash value (ACV)." The latter means the amount you spent in actually buying the insured item. If for example you bought a particularly valuable ring at $200 several years ago, ACV means the insurance will only cover your loss up to around $200, the amount you paid for the ring at the time of buying, when in fact $200 would be far below the market value of the ring in this day and age. However, this may be beneficial to you if your insured item was bought fairly recently. On the other hand, replacement cost allows for a little more flexibility. Both these reimbursement terms are subject to deduction, depending on the amount of use your insured item has been put through, and some other considerations.

This type of renters security could also take the form of allowance. For example, in the event that a disaster destroys most of your apartment home, making it unlivable, it is important to have some form of financial fallback that will cover the cost of staying elsewhere, while the insurance from the damage done to your property is being settled. Ordinarily, building insurance will not cover the additional living expenses incurred when living away from the building per se. It would be good to find a third party insurance provider that could help shoulder a good deal of the cost.

A good renters insurance could work both ways, too. You may find it a formidable ally should a liability lawsuit be filed against you. This could happen in case you accidentally cause injury to others, or damage other people's property.

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