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Do You Really Need Renters Insurance?

By Compuquotes Team on March 27th, 2008
Renters Insurance

Most people know what homeowners insurance is, but do you know what renters insurance does for you? Renters insurance is very similar to homeowners insurance in many of the ways it protects the policy owner. Your renters insurance premium is determined on a few different factors. In order to make the right investment you need to have a basic understanding of the policies that are available to you, as well as the factors that are determining your premium cost.

One of the first things you need to ask your insurance company about is whether the coverage on your personal belongings is based on actual cash value or replacement cost value. They sound similar but are completely different so don't get them confused. The actual cash value coverage will reimburse the policy holder for the actual cost of the property at the time of loss.

The replacement cost coverage will pay for the actual replacement cost of the property at the time of loss. Obviously a replacement cost renter's insurance rate is more expensive than the actual cash value considering it will reimburse you for more if a claim is made.

Your renters insurance policy will cover your personal possessions against damage caused by fire, storms, or any other covered natural disaster. Your renters insurance will also cover any loss that is due to theft or accidents caused to another person while they are on the covered property.

The premium rate is largely based on what types of items you own and how valuable they are. You will likely be underinsured if you do not have a complete and detailed list of your home's inventory. Before calling a single company you should have a detailed inventory list that includes the price, condition, as well as any appraisals and receipts that you have. Keeping this in a safe place simplifies the already stressful claims procedure.

If you own expensive items such as jewelry, furs, and antiques then it is wise to get extra coverage that will cover these high priced possessions. Many renters' insurance companies advise their customers to take out a separate rider policy for these items. Claim processors claim that if a high priced item has never been declared then it is not covered in the policy and you are left in the hole.

Possibly the most important coverage that is included in a renters insurance policy is the liability protection you can purchase. Liability generally has a limit of thirty to fifty percent of the total value of the policy. You can also purchase additional coverage that is known as additional living expenses protection. If your home is rendered unlivable or is being repaired then this protection will cover all of the costs of living such as a hotel, dining out, and the laundry mat.

Your renters insurance rates are determined based on different factors such as the location of your rental property, the deductible you choose, as well as any of the additional coverage options you choose.

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