IF YOU RENT a house or apartment, your landlord’s insurance policy might cover the building, but it typically won’t cover your possessions. That is where renter’s insurance can come in handy.
The policies cover personal possessions, including furniture, computers, televisions and jewelry. If these items are stolen or damaged by a fire or broken water pipes, you should be reimbursed either for the current cash value or for the replacement cost. A policy might provide $50,000 in total protection, with caps on certain categories, such as limiting jewelry coverage to $1,000 unless a special rider is purchased. Renter’s insurance doesn’t cover damage from floods caused by, say, heavy rains, and it may not cover hurricanes.
Many policies provide liability coverage in the event someone is injured at your home. This typically covers claims of up to $100,000, including the related legal costs. You may also receive living expenses if you’re unable to live in the home for a period of time.
What if you figure your personal possessions aren’t worth that much or replacing them won’t cause that much of a financial burden? If that’s the case, you may want to skip renter’s insurance—unless your landlord insists you get a policy as a condition of renting the apartment.
Next: Step 3: Asset Protection
Previous: Home Insurance