You rent an apartment and have an upstairs neighbor. Their toilet, dishwasher, or water heater suddenly has a major leak and your apartment is flooded. Who pays for your damaged stuff? Or maybe you rent a house and head off to work with the dishwasher running. At the end of the day you come home to find out there was a fire. Who pays for your losses?
In both cases, it’s not the neighbor or the property owner. It’s you if you didn’t have renter’s insurance. However, if you have renter’s insurance, then your losses will be covered by the policy. This is exactly what renter’s insurance is for, to protect you financially in the event something goes wrong.
Renter’s insurance does two things for its policy holders;
- It covers the personal property or contents in your home protecting you financially should something happen
- The policy also covers you in the event someone is hurt, due to your negligence
Many tenants require renters insurance, but how much should you have? Enough to replace your;
- Furniture (Sofa, chairs, dining table, bed, etc.)
- Kitchenware (dishes, pots, pans, small appliances, etc.)
- Decorative items (pictures, artwork, etc.)
- Electronics (computers, smart phones, TV’s, printers, etc.)
When I talk with people about how to estimate the replacement of their items, I suggest they make a list of what they have and what it would take to replace each large item with a new version of it (chair, sofa, bed, toaster, etc.). Add that up and then an estimated total on clothing, food & cleaning supplies. Some rules of thumbs (and these are only guidelines) are;
- Recent college grads, $10,000 minimum up to $25,000
- About 5 years into your career and started to accumulate items, then $25,000 to $40,000 may do
- 10 years into your career, have one or more children, are in 2 plus bedroom home then $40,000 to $75,000
- In a luxury condo or high rise, $75,000 on up
Wherever you fall in these categories, remember to note any specific valuable items such as jewelry, collectibles, original artwork, musical instruments, etc. as these may need to be scheduled to have adequate coverage
On the liability and medical side, we suggest coverage limits of;
- $100,000 to $300,000 at a minimum for personal liability ($500,000 at least if your income is $100,000 or more)
- $5,000 for medical
- In both cases, the difference between these levels and the entry levels is minimal
Once you’ve determined how much coverage you need, ask for quotes with the deductible set at $250, $500, and either $750 or $1,000. That will help you determine from a budgetary stand point what makes sense.
If you have a question or one of those stories of, “Guess what happened…?!” share it with us in our comments section below or on our Facebook page. We’ll all learn from it!