How Much Renters Insurance Do You Need?

Purchasing renter’s insurance is very important when you are renting a home. In the case of a disaster, you’d hate to lose all your personal belongings and not be able to replace them. You never realize how many personal belongings you have until you lose them and realize you don’t have the money to purchase new items.

When homeowners purchase home insurance they usually get an amount to pay their mortgage plus some for their personal belongings inside the home. If there is not a mortgage on the home, they often go by appraisal value. Because your personal belongings in your rented home are not appraised, it may be more difficult to determine a dollar amount for renter’s insurance.

The best way to determine how much renter’s insurance you need is to take inventory of what you own. This is neither an easy task nor one that can be done in an hour’s time, but it needs to be done. Start with one room at a time, writing down everything you own.

If you can remember what you paid for these items, write this down as well. You will have certain items that depreciate with age such as computers, televisions, appliances, etc. Besides these items, write down what they would cost you if you had to replace them. Renter’s insurance may pay for damaged items based on replacement costs (what it cost to buy new ones) or actual cash value (what they are worth now). Make sure you find out from the insurance company which method they will be using for your policy.

When you get your total complete, keep it in a safe place in case of a disaster. Once you have totaled up your inventory, you will have some idea of how much renter’s insurance you will need to adequately cover your personal belongings. Use the figures of what it would cost you to replace these items as your guideline. It’s better to have too much insurance than too little. When the agent asks you what you had in your home, you will be able to show him/her the list.

Personal belongings that can’t be replaced such as heirlooms, expensive jewelry or treasured photographs should be kept in a fireproof safe or safety deposit box. Regardless of how much renter’s insurance you have, family keepsakes and treasured photos cannot be replaced.

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