Do you need renter's insurance?

After you sign your lease to a new apartment and shop for furniture, it may be time to think about protecting your assets. You may purchase renter's insurance without actually needing it for years; however, the small investment will help you rest assured you are covered during catastrophic events.

"A lot of consumers are under the misconception that their landlord's policy will provide coverage for them, and that's not the case," Loretta Worters, vice president at the Insurance Information Institute told The Washington Post.

Often, the building or landlord's insurance policy may cover structural damage caused by extreme weather or a fire in the apartment building, but what about coverage relating to a theft or accident? Most building management companies do not provide coverage for personal belongings.

In addition to coverage for your clothes, electronics and furniture, a renter's insurance policy will protect a tenant if someone gets hurt in his or her apartment. Liability protection is standard with most renters policies. Medical bills are no joke, and while a tenant may be insured through his or her company, who is responsible for the hospital bills of a friend who became injured in your apartment? Without renter's insurance, you will be forced to pay the bills yourself.

Rental insurance may also pay for temporary housing in a hotel in case of a fire or extreme weather that may leave your home inhabitable. As the building management company works to renovate the structure, they will not pay for accommodations for the time-being.

Incidents most often covered by renter's insurance:
-Extreme weather such as a fire, windstorm or hurricane
-Theft
-Damage caused by ice, snow or hail
-Flooding caused by heating, ventilation or air conditioning units
-Damage caused by household appliances such as a fire from the stove
-Damaged pipes

Reading the fine print: Actual cash value policies will pay for an item that was lost or stolen based on its original value. For example, if you purchased a couch for $400 three years ago, the value of the piece of furniture will be much less today. Some policies will pay you for the actual cash value today. A replacement cost coverage policy will reimburse you for what you paid when you bought the item, or in this case the full $400 minus a deductible.

Cost: While the Washington Post notes that a basic renters insurance policy can cost anywhere from $120-$200 a year, there are a few things that can increase or decrease this figure, including your city, neighborhood and deductible. If you have a home security system, sprinkler system, front desk or a working fire detector, you may get a slight discount in your policy.

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