Think about your typical checklist when moving into a rental property: Furniture – check. Kitchenware – check. How about renters insurance? Although your landlord’s homeowners policy covers the building, you’re responsible for purchasing a renters policy to protect your belongings inside.1 Yet according to the Insurance Information Institute, only 46 percent of renters have renters insurance coverage.2
What does renters insurance cover? It helps protect your personal possessions from loss or damage due to fire, smoke, theft and other specified circumstances. (Floods and earthquakes are not covered by a standard policy.) It also covers situations involving liability and additional living expenses.1
If you’re wondering, “How much renters insurance do I need?”, Amica recommends conducting an inventory of your belongings and reviewing which renters insurance policy options may provide the proper protection for both you and your possessions.
Take a household inventory
Your possessions can hold personal value, but you’ll also need to calculate how much it would cost to replace them. The easiest way is to complete a household inventory.
“I'd say most people don't even realize how much stuff they own until they do a household inventory,” says David Faiola, a sales representative in Amica’s National Sales Center.3 Go room by room, make a detailed list of your belongings, their date of purchase and estimated value. Faiola and Chris Murphy, a claims examiner at Amica, both point out that you shouldn’t forget the everyday stuff, like clothes. “I think a lot of people overlook their wardrobes, how many clothes they have and how much they cost,” Murphy says.4 To help simplify the process, count your clothes by general category; for example, “three pairs of sneakers.” Remember to include off-site items, such as those in a self-storage facility ¬– they’re protected, too.5
Take photos as you go along to help document your inventory. If you have receipts, keep them in a secure location, like a safe deposit box. Create backup digital files as well.5 Once you’re in the habit, continue to add information with each new purchase. You can call to review your coverage needs periodically and when changes occur.
Review your personal property coverage options
You can customize your renters insurance policy to meet your needs. For example, you can choose an actual cash value or replacement value policy. If your TV is a few years old and was stolen or damaged, an actual cash value policy may reimburse you the original cost minus its depreciation, which is based on the age and condition of the item at the time of loss, says Murphy. A replacement cost policy, in comparison, should reimburse you the full cost to replace that TV. This type of coverage usually costs about 10 percent more, but it can be worth the extra expense.1
You also can broaden your protection by scheduling certain valuables. Standard policies often have a dollar limit on some types of property, such as jewelry.1 If you have special types of property that are worth more, you may need to purchase a scheduled personal property endorsement to increase your coverage for these types of items. In the event of a claim, your deductible ¬– or the amount you’d pay out of pocket before your coverage kicks in – would be waived for the items you schedule. For example, your $5,000 engagement ring is stolen on your honeymoon. Under a standard homeowners policy, you would be reimbursed up to the $1,500 limit for that ring.1 Scheduling that ring would allow you to expand coverage up to its scheduled limit.
“Finally, when protecting computers and certain electronics, you may want a computer endorsement, which can be less expensive than individually insuring items upon purchase,” says Murphy. Also, it typically covers more than just computers. “Computer equipment means hardware, software, operating systems and networks,” Murphy adds.
Consider your liability coverage amount
Renters insurance can cover more than just your possessions. It also can provide liability protection for bodily injury to others caused by an accident in your home, as well as damage you may have caused to the property of others. Liability coverage usually starts at $100,000, but some insurers recommend you have at least $300,000 worth of protection.1 “If you have any concerns at all, for a few dollars a month, you can have several hundred thousand dollars more of coverage,” says Faiola.
Lastly, if your rental property is damaged and you need to live elsewhere temporarily, renters insurance can cover your additional living expenses – such as hotel bills or restaurant meals – valued up to 30 percent of your policy’s overall coverage, though you can add more if need be, says Faiola.
By factoring in these coverages and others that Amica offers, you can tailor a renters insurance policy that’s suitable to your budget and lifestyle.