How Much Renters Insurance Do I Need - ALLCHOICE Insurance - North Carolina

How Much Renters Insurance Do I Need?

Estimated reading time: 5 minutes

Return To: Renters Insurance – The Ultimate Guide

Securing renters insurance is a smart decision for any renter because it provides you with the best defense you can get on things in life you cannot control. Situations such as losing belongings due to them being stolen or damages caused by a careless neighbor are just a few examples.

If you ever come across these situations, you do not have to panic since you have renters insurance to protect you. Since this type of insurance is essential, how much of it do you actually need?

How Much Renters Insurance Coverage Do I Need?

There is no single answer to the question, “how much renters insurance do I need?” Different individuals have different needs and priorities. What one person may feel is sufficient coverage for them may not be adequate for another.

The primary decision to make is deciding on the limits to the personal property and liability coverage you should get. The two features cover the biggest financial exposures for tenants and are also the main drivers for the overall cost.

Seeking guidance from an insurance agency can help you determine how much renters insurance you need.

How Much Renters Liability Insurance Do I Need?

The majority of renters insurance policies offer liability insurance coverage that ranges from $100,000 to $500,000.

A good rule of thumb is to sum up your net worth. You should include bank accounts, the value of your car, and any retirement savings. By choosing enough liability insurance that can cover the amount of these things, you can reduce the risk of a lawsuit taking out all your assets.

How to Calculate Renters Insurance

Here are the basic steps when calculating renters insurance.

Perform an Inventory

One of the first things you should do is find the total worth of everything you own. Go from one room to the next and note down all of the things there.

With a basic list, you can make changes to it and even add photos, receipts, and serial numbers for more details.

You can create an inventory by:

  • Compiling a spreadsheet of your belongings
  • Estimating the expenses of replacing each item
  • Paying attention to valuable things
  • Summarizing the estimated total cost

Estimate How Much in Deductibles You Can Pay

Consider your deductible next or the amount you are willing to pay out-of-pocket when making a claim. You get to pick this amount upon purchasing your policy.

The higher the deductible selected, the lower the premium costs. The most common deductibles range from $500 to $2,000.

Keep in mind that there are several parts to your renters insurance policy. This includes personal property coverage, additional living expenses, liability coverage, and other optional add-ons.

The deductible you have chosen only applies to your own personal property coverage. There is no deductible involved if you make a claim on medical or liability coverage.

What Does Renters Insurance Cover?

Typically, renters insurance policies are made up of three unique components that have separate types of protection offered. 

Type of CoverageWhat It Covers
Personal Property CoverageYou get reimbursed for personal items that are damaged, destroyed, or stolen by a covered peril
Personal Liability CoverageYou are financially protected if you cause damage to the rental or when someone gets hurt within your property and requires medical attention
Loss-of-Use CoverageYou are reimbursed for the cost of finding a new rental or staying at a hotel if your home becomes unsafe to live in because of a covered peril
Renters Insurance Main Coverage Parts

For instance, if your personal property has been damaged due to a fire, the renters insurance personal property coverage can protect you by providing reimbursement for your loss.

If repairs are necessary after the fire, then the loss-of-use coverage you have will pay for the temporary relocation you need.

In case you damage anything while staying at your temporary rental, then the liability coverage can help pay for any repairs.

The most common perils covered in renters insurance policies are:

  • Theft
  • Fire
  • Windstorm
  • Hail
  • Smoke
  • Vandalism

Is Renters Insurance Required?

The only time you are required to have renters insurance is when your property management company or landlord necessitates this from their tenants. Some landlords make it mandatory to have renters insurance to minimize the risk of tenants going after them for liability costs or personal property damages.

It can be quite common for a landlord to require you to have renters insurance. The good news is that there are experts that can help make getting your insurance policy easy and painless.

Although a growing number of landlords are beginning to require tenants to possess renters insurance, many people are not required to buy it and often forgo having such a policy.

Yet even if it is not necessary, it is always best to shop for renters insurance to stay protected. Getting personal property, loss-of-use, and liability coverage can significantly reduce the financial impact of unexpected events that result in damage to your belongings or rental home.

How to Get Renters Insurance

A renters insurance policy is easy and affordable to buy. Many insurance agencies let you request a quote and do everything through their member portal.

Before buying, you should finish your home inventory so you have a better idea of what you need. You can then shop around, compare quotes, and study the coverage options provided before deciding.

When talking to an insurance company representative, you should ask the following questions:

  • What perils does your insurance cover?
  • Do you take into account all my personal property?
  • Do I get an actual cash value (ACV) or replacement cost value (RCV) policy?

Conclusion

For most individuals, getting renters insurance is a good fit for their needs. It provides them with protection from accidents and peace of mind knowing that they are protected. If you believe that getting renters insurance is the right choice for you, contact an agent to find out how you can get a policy. Whatever coverage you decide on, having a way to keep your personal belongings protected is always important when you are renting a property.

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