How Much Renters Insurance Do I Need? Img ©
So how much renters insurance do you need? There are actually a number of different types of coverage in your policy, so let’s take a look at each of them and how they fit together.
How Much Renters Insurance Do I Need For Personal Property?
Personal property coverage is what protects your things in the event that a covered loss damages or destroys them. What’s a covered loss? Something that’s named in the policy such as fire, theft, vandalism, or even a broken pipe. When one of those things causes your property to suffer a loss, you’ll want to replace that property.
The first thing to be aware of is to make sure you have replacement cost coverage on your policy. Most policies do, because it’s a matter of just a few dollars a year. Replacement cost makes sure you can go buy a new item of like kind and quality, rather than suffering with something you picked up at a thrift store because you only got the actual cash value of your things.
Once you have renters insurance at all, it doesn’t cost much to increase the personal property limit. The best way to find out how much personal property coverage you should have on your policy is to add up everything you own at what it would cost to replace it. This is a great time to make a home inventory, as well.
If you’re not moving and it’s impractical to make a list of absolutely everything you own, make sure you take pictures or video of each room of your home. That will help when there’s a loss, and it helps to determine how much stuff you have and therefore how much coverage you need.
Add up the replacement cost of everything you see, and then round up at least to the next $5,000 mark because there will be some things you forgot to list. Doing so doesn’t markedly change the cost of the policy, and it makes sure that you don’t end up in a situation where you have too little coverage. If you have $22,000 of property, you should round up to $25,000, for example.
How Much Renters Insurance Do I Need For Liability?
Liability coverage on your renters insurance is what pays for bodily injury or property damage that you cause to others. You should take as much coverage as is offered here, and not a penny less, for three very simple reasons.
First of all, the coverage is very affordable. The difference between $100,000 and $500,000 of liability might be ten or fifteen dollars a year. This obviously offers you better protection.
Second, your liability coverage includes defense costs outside of the policy limit. That means that, regardless of your liability limits, that defense is paid for by the insurance company without impacting the available amount of coverage. This applies to a claim that could be paid under the policy, even if the suit or claim is false, frivolous, or just plain ridiculous! Remember, though, that the insurance company is only obligated to defend you until they’ve settled or paid the policy limits. With higher limits, you can potentially be defended longer if there’s a large loss.
How Much Renters Insurance Do I Need For Loss Of Use?
Loss of use coverage on your renters insurance pays for additional living expenses after a covered loss. If a pipe bursts, you’ll need to stay in a hotel for a few days until the apartment can be dried out, for instance. Generally, loss of use is tied to the personal property limit, and increases as personal property coverage increases. Often, for example, you’d have $4,500 of loss of use coverage at $15,000 of personal property, and $9,000 of loss of use at $30,000 of personal property.
Generally, these numbers are adequate for most losses, because it’s not a permanent situation. Even if your apartment was destroyed by the loss like in the Avalon fire, you’ll be looking for a new apartment while you’re staying in the hotel. This puts a practical limit on the amount of time you’ll need the coverage.
How Much Renters Insurance Do I Need For Medical Payments To Others?
Again, as much as possible. It’s cheap, and it’s a great way to save your bacon in situations where no one is really at fault. Generally, you can get from $1,000 to $5,000 of medical payments coverage on your renters insurance. It’s there to cover injuries to a guest in your home where there’s no real fault to be found.
If you have company – or your kids have friends over – and they injure themselves by tripping over their own two feet, or by dropping a glass that shatters, or in just about any other way, they’ll think you’re responsible even if you couldn’t possibly have avoided the risk or prevented the loss.
Because medical payments coverage doesn’t require fault, it’s a great way to resolve those sorts of situations. The person who suffers the loss gets their medical care paid for, and they don’t then sue you for something you’re not responsible for!
It’s not hard to answer how much coverage you should have on your renters insurance. If you have questions or need a policy, just call (800)892-4308 or click to get covered - whether you need Plano renters insurance quotes online or coverage anywhere else!
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Photo Credit: Duncan Hull Do Not Attempt To Answer This Question, Your Head Will Explode, via David Spiegelhalter CC BY 2.0