Cynthia writes in with today’s question because she needs renters insurance in Denver, CO. She asks,
How can I compare a renters insurance policy? What do I need to look for? Are there any pitfalls I should be aware of? They all look the same, but price can’t be the only difference…
Commonly, we’re asked how can I compare renters insurance. While the actual answer is to read the declarations and policy documents side by side, that’s rarely practical. There are a few things you should know about how to compare renters insurance, and our advice will serve you well.
How Can I Compare A Renters Insurance Policy?
Cynthia, who needs renters insurance in Denver, CO, writes in with today’s question. She wants to know, how can I compare a renters insurance policy? We’ll discuss things to look out for, coverage, and more…
How Can I Compare Renters Insurance? Loss Settlement
Loss settlement refers to the rules written into the policy about how a claim is paid out, and for our purposes we are referring specifically to personal property coverage. There are two common kinds of loss settlement when learning about comparing renters insurance. The first is known as actual cash value. That means your claim will be paid based on the actual cash value of the items suffering a loss at the time it occurred.

Compare Renters Insurance
Do we see a problem with actual cash valuet? Let’s seek advice from the Oracle of Actual Cash Value, also know as Craigslist. On a random day in July, we found an ad for a 2 year old microfiber couch for $100 or best offer. We then found a new, substantially similar couch of “like kind and quality” at a major furniture store’s website. The new couch is $769.95, plus delivery. The actual cash value of your two year old couch is $100 or even far less than that! How would you replace your couch if it were lost in a fire when you only have one eighth of the cost to buy a new one? You wouldn’t. That’s why replacement cost loss settlement exists. You get the cost to replace the item with a brand new one of like kind and quality, which is what you need if you want to rebuild your life at a reasonable pace after a tragedy.

How Can I Compare Renters Insurance?
It’s also important to note that many insurance carriers settle losses initially at actual cash value and then later pay the difference after you replace the item and submit a receipt. This isn’t a huge deal because you do eventually get the money, but it can be an inconvenience. The way people often do it is to use the actual cash value check to replace a few big ticket items, submit receipts, get replacement cost, then replace a few more items, and so on.
How Can I Compare Renters Insurance? Service Hours
It’s rare that you’ll need your insurance agent at 3 in the morning. You may well need claims at that hour, however. It’s important to make sure you know what the availability of your carrier and your agent are before you need them in the middle of the night!
How Can I Compare Renters Insurance? Online Review Sites
Online review sites are generally not a good way to compare renters insurance. First of all, your needs and experience vary from someone else’s. A policy that fully meets your needs might be entirely inadequate for another person. You may own a condo, where the association covers the walls and you’re only responsible for betterments and improvements (from the sheetrock in, generally), and the reviewer may own a house. In the latter example, a “walls-in” condo policy would not meet the needs of the homeowner.

How Can I Compare Renters Insurance?
Pay particular attention to the motivations and situation of reviews of claim scenarios. It’s important to have an idea how your carrier will respond in the event of a loss, to be sure. But a national representative study of claim-related renters insurance complaints found that fifty-eight percent of them involved a lack of cooperation on the part of the insured and/or outright fraud, such as insuring items they didn’t own in the first place. The majority of the remaining 42% of online claims complaints could have been resolved easily if they had been brought up to the insurer instead of published online.
When you see an online renters insurance review complaining about slow payment or denial of a claim, consider that each insurer has a threshold below which claims without prima facie evidence of fraud are paid without anything more than a verbal or written statement of loss from the insured. This threshold generally is fairly low, but it does exist. Sometimes it’s just cheaper to pay the claim than fight it. If you see an online renters insurance complaint with a low claim amount and concerns about payment or denial of the claim, you need to consider the circumstances. If an insurer is fighting a $500 renters insurance claim, you can bet it’s because something looks amiss on its face. So take complaints about claims denial with a grain of salt.
How Can I Compare Renters Insurance? Valuable Items
While the HO-4 renters insurance form is fairly standard in most places and published by the Insurance Services Office, different carriers amend the language in different ways. If you have items of significant value such as jewelry or art, there may be a sub-limit on that category of property. In that case, your agent should let you know that an endorsement is available to provide complete coverage for the item, or he should offer to set up a separate policy just for the item.
In order to know what large items are covered and which ones aren’t above a certain number, you need to read the “Special Limitations of Liability” section under personal property coverage. Sub-limits are spelled out there. They can also be amended out with an endorsement for valuable items, so you need to read the entire declarations page and you should read the policy as a whole to make sure that you’re properly protected.
How Can I Compare Renters Insurance? Financial Stability
Financial stability is a crucial factor in choosing an insurance company. You want to work with a carrier that is rated highly by A.M. Best or similar organizations with a long history of transparency and legitimacy. You need to know your carrier will be there for you in the worst of times, even if you’re one of millions of people making similar claims such as a natural catastrophe situation.
Ultimately, how can I compare renters insurance is best answered by a side to side comparison based on information directly from the carriers or your agent. If you have questions on how to make a renters insurance comparison, you can call Effective Coverage at (800)892-4308 for more detailed information, or just click above for a free, instant online renters insurance quote.