Do You Have to Buy Renters Insurance?

Now that you found an apartment, it's time to sign the lease. Before you move in, though, decide if you need to purchase renters insurance.


What is Renters Insurance?


Let's say the roof leaks and floods your bedroom. Your landlord will pay for structural repairs, but you're responsible to replace your personal property. That's why you have renter's insurance. It pays to repair or replace items that are damaged or stolen.  


Is Renters Insurance Required?


Your lease may include a clause that requires you to carry renter's insurance. It protects him or her from a lawsuit you may file if your personal property is damaged or stolen. Additionally, the building's mortgage holder or insurer may require tenants to carry renters insurance. However, there is no universal law that makes renters insurance mandatory for all tenants.


Decide How Much Insurance Coverage You Need


Although you have the option to choose or decline renters insurance, it's a wise investment. A small grease fire and the smoke and water damage that result can quickly ruin everything you own. If you can't afford to replace your property, purchase renters insurance.


Determining how much insurance you need to buy can be tricky. First, decide if you want full replacement cost or actual cash value (ACV).


* Replacement Cost pays for you to buy new items at today's cost no matter what you paid for the item. So even though your laptop is six years old, you can buy a new one with replacement cost renters insurance. This type of policy is a bit more expensive than actual cash value.

* Actual Cash Value (ACV) ACV covers the item's current worth at the time it's lost, stolen or damaged. This option is affordable, but if a fire damages your secondhand futon, you only receive a few bucks, which won't be enough to buy a quality replacement. 


Next, figure out the value of what you own. Make a detailed inventory list and assign each item a fair value. With this list, you can decide on a coverage amount that provides the protection and peace of mind you need.


You're now ready to choose a deductible. Higher deductibles usually mean lower premiums, but make sure you can afford the higher deductible.


Finally, talk to your insurance agent. He or she can help you find the coverage that fits your budget and needs. While renters insurance is usually optional, it's a wise investment that you'll probably be glad you made. 

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