Cover your belongings with renter's insurance
Bankrate.com staff

The hunt was successful and you found the perfect rental. Your new Ethan Allen furniture and home stereo system are styling in the new place. Now that you're settled in, you're thinking it's time for a vacation. Not so fast.

What happens if someone decides to break in and steal your state-of-the art sound system while you're off hula dancing in the tropics? Without renter's insurance, you might be out of luck and out of a stereo system. A renter's policy covers the walls that surround your personal belongings, but not loss or damage to your personal property.

"Renter's insurance is important for protecting your belongings. Renters often have the misconception that a landlord is responsible for lost or damaged property and that's just not the case," explains John Simms, operations manager of the American Renters Association (ARA). Renter's insurance, also known as tenant's insurance, is a type of homeowners policy that protects you and your property both inside and outside of your home.

The type and cost of the plan you purchase is based on your individual needs. An estimate of the value of your personal property will determine the amount of coverage you should purchase. When estimating this value, be sure to include everything from jewelry to pots and pans.

Once you've valued your personal belongings, it's time to put in the calls. The ARA can give you insight into affordability, dependability, and customer service for the leading insurance providers.

Types of coverage

When you receive estimates for insurance policies, make sure you write down the types of coverage included in the policy. Most insurance policies offer three types of coverage: personal property coverage, liability coverage and replacement cost coverage.

Personal property coverage protects your personal property against fire, smoke or lightning, burglary or vandalism, riot or civil commotion, explosion or electrical surge damage, windstorm or hail, falling objects, and other hazards described in the individual policy. What if your $200 CD player gets stolen while you're away from home? Your property is covered at home and away up to a maximum. Check with your insurance provider for details.

And what if you just get back from picking up your new CD player when the doorbell rings. The exterminator comes in and slips on the kitchen floor before you can tell him it's wet. How will you cover his hospital costs? The second type of coverage -- liability -- offers you financial protection against suits for accidental bodily injury or damage to property while in your home, caused by your activities or by your children or pets.

Replacement cost coverage, the third type of coverage, is additional protection that ensures that if loss occurs, you will be reimbursed for the full cost of repair to replace your property at today's cost, provided it does not exceed the policy limit.

Protecting your wallet

Renter's insurance is a fairly cheap way to protect yourself and your belongings. Policies range from $75 to $400 per year depending on the desired coverage. The ARA lists a policy for $179 to cover $10,000 of personal property and $25,000 of personal liability coverage.

Like other insurance policies, renter's insurance may offer discounts. The presence of dead bolts, security systems, smoke detectors and fire extinguishers in your rental property can result in a small insurance discount. Purchasing your renter's insurance from the same company that provides your automobile insurance might make you eligible for a dual-policy discount.

Whether it's peace of mind or high rates of burglary that prompt the purchase of renter's insurance, make sure you get the best deal for your money. It's important to protect your personal property -- including your wallet.

-- Posted: July 21, 1998