WHAT IS RENTER'S INSURANCE & DO I NEED IT?
If you are moving into an apartment you may want to consider
investing in insurance. Along with the first month's rent,
chances are you will be asked to pay a security deposit. This is
a type of insurance for your landlord. The landlord can use this
deposit to pay for any damages caused during your residency. For
you, security comes in the form of renter's insurance.
Most renters use the homeowner's form of insurance known as the
HO4 policy. This policy will typically cover furniture,
clothing, and most personal property in the event of fire or
smoke, lightning, vandalism, theft, explosion, windstorm, or
water damage from plumbing. In most cases, the insurance company
will take your word for what you think your property is worth.
However, if you're wanting to insure your jewelry, art pieces or
other collected items, you might need to pay extra for what's
called a "Scheduled Personal Property Endorsement." For this
type of coverage, the insurance company will send out an
appraiser. An appraiser will also be sent out to your property
in the event that your insured items have been damaged.
For a little extra, most insurance companies will cover your
things on a replacement-cost basis. For example, if your old
microwave is only worth fifty dollars, but it would cost one
hundred and fifty to replace it, the company will insure that
microwave for a hundred and fifty dollars. That way, in the
event of an actual disaster, or if your property is damaged and
your insurance company is going to cover it, you won't be
reimbursed for a ten year old refrigerator or a five year old
couch, but for what it will cost to replace them.
The HO4 policy also pays any necessary additional living
expenses you are forced to make due to a natural disaster or in
case your apartment asks you to move out for a short period of
time while they remodel, fumigate, etc. If your apartment
building is hit by a tornado, it's going to take more than a
couple of days to rebuild your complex. Eating every meal out
and living in a motel can add up quickly. By investing in this
policy, you won't have to worry about these expenses.
Renter's insurance is typically priced around $200/yr for $30K
worth of coverage and $100K worth of liability. However, the
cost for renter's insurance may vary depending on several
factors. For example, you will pay a lower premium if you're
next door to the fire department than if you're two miles away.
If you are in a high crime area, your premium will be
considerably more than someone living in a picture book
neighborhood. In older apartments without up-to-date wiring, the
premium will be a bit higher. For complete details, contact your
local insurance company.