Even the most responsible people sometimes are under the misconception that they do not need renters insurance. One reason often given is the belief that the property owner must have insurance so the renter is covered. In fact, that is not true. The coverage for homeowners insurance is different than the coverage for property rented out. In essence, the property owner’s coverage will protect what is theirs such as the structure. If you are the victim of fire or theft, and you are living in a rental home; your property is not covered by the property insurance. This means you will have to pay to replace everything you have lost.

Here are a few tips to help you make the right selection of coverage.

1. Know the value of your belongings.

It is estimated that the average family of four own $25,000 worth of property. We do not always see the value in our belongings and we do not take into account that some items increase in value with time. Make a detailed list of all your property. Include brand names and serial numbers if possible. Take pictures of items to assist you if you need to make a claim. At the time of the incident, it is often hard to remember details. If you have special jewelry, such as your grandmother’s ring; take a picture of the ring with you wearing it or holding it. This is proof that you are not trying to push up the value of your claim. Keep the lists and the photographs with your renter’s policy in a safe and fireproof place. Do not make the mistake of simply storing the list and photographs in your computer. The computer may be part of your loss.

2. Loss of use

A key item overlooked by renters when buying renters insurance is “loss of use”. This is an inclusion in your policy that pays for a place for you to stay while repairs are being done. For example, if your rented house had a flood or a fire and it will take two weeks to clean it up and repair it; you will need to live in an extended stay hotel. Loss of use in your policy pays for the expense of the hotel.

The additional cost to your policy is minimal. This is often thought of as a minor inclusion. However, if your home is damaged by fire; you may have to purchase clothing, shoes, medications, eye glasses, dishes and things like towels and wash cloths. It takes time to file a claim and get paid (or reimbursed). This could limit your immediate cash flow considerably. Having the extended stay hotel paid for by the insurance company reduces your expenses.

3. What kind of coverage do you need?

There are two types of renters insurance. They are RV or replacement value insurance and AV or actual value insurance. The differences are obvious. Perhaps you purchased your television five years ago and bought it on a Black Friday Sale for $500.00. With actual value insurance they will take the price you paid and give you the depreciated value of that television. When they add in the amount of time you owned the television, and the fact that it is an older model, they may give you $100.00. You cannot buy that television or one close to it for $100.00. If you had replacement value insurance they would figure it completely differently. They would price it as what it would cost today to buy a television of the same size and the same brand as the original. Most people feel this is well worth the cost.

Now that you see the importance of having renters insurance, do not wait. We never know when disasters will strike. Call your insurance agent today!