Factors That Determine How Much Rental Insurance You Need

If you’re looking for a new apartment or house, you might have noticed that many landlords require that tenants purchase rental insurance. But how much insurance do you need?

Rental insurance protects against losses to personal property while renting an apartment. It covers the renter in case of theft, fire, vandalism, and other types of damage.

This policy can also provide liability insurance if someone gets injured on your property. Here we shall discuss the factors you need to consider while determining the amount of rental insurance to buy.

1. Your Belongings

The biggest factor in calculating how much insurance to buy is how much you own. For example, if you have a high-end apartment, an expensive car, or lots of costly jewelry, you’ll want to purchase more coverage than if your belongings are lower-priced.

You can also choose to purchase insurance for individual or grouped items. For example, suppose you own a high-end television and expensive computer equipment. In that case, consider buying a policy that will cover the two items separately in case they get stolen or damaged during your tenancy.

2. How long you’ll be in the Unit

The length of time you plan to remain in the apartment is another important factor. For 12 months, you will use your belongings more heavily than if this is a temporary arrangement. This means that you may need a higher level of coverage over a shorter period.

In addition, landlords often like tenants to cover their belongings for just one year when they sign the lease agreement. If you plan on remaining in your new home for longer than one year, consider extending your coverage for that length of time as well.

3. Your Demands

While any renters’ insurance policy will protect your belongings from theft, damage, or loss, you may also want to choose a policy that covers other daily needs. You may require coverage for utilities such as telephone, cable, and Internet service. You might also require coverage for specific items, such as an in-home gym or video gaming equipment.

Some policies even cover pet damage and medical situations, though this is rare. Sometimes, you might decide that you don’t need the full extent of rental property insurance protection when you buy a policy but only want to cover more specific items.

4. Your Budget

Renters’ insurance is usually a small percentage of your monthly rental payment, and you can use the cost as a barometer of how much coverage you need. For example, if you have an expensive apartment with several high-end items, it might make sense to buy a slightly larger policy than typical.

5. What Your Landlord Requires

If your landlord requires a specific amount of insurance from tenants as part of the lease agreement, it’s in your best interest to follow this request. If you don’t, your landlord could potentially evict you or refuse to renew your lease when the current contract ends.

6. Other Tenants in Your Building

If other tenants in your building have filed claims for stolen or damaged belongings, for example, this can signal a problem with crime in the area.

A large number of claims from neighbors could also mean a problem with the building’s security, such as doors and windows that are left unlocked or damaged. To protect yourself from future damage and theft, consider buying more renters insurance coverage than is usually required by landlords.

7. How You Use Your Belongings

Your possessions get used differently depending on how you live. For example, if you use any of your belongings in self-employment, they might be more expensive to replace than typical items. If you do a lot of traveling or take expensive vacations, you can usually get more coverage by paying higher premiums through a separate policy.

8. Personal Information

Consider disclosing some details about yourself when you apply for a renters’ insurance policy, such as whether you own a home in another location or have any medical conditions that could raise your risk of needing additional coverage.

9. The Location of Your Unit

What you should consider most is the possibility of damage occurring at your residence. If there have been several claims filed against the landlord by other tenants, it might be worth purchasing additional coverage to protect yourself from any losses.

In some cases, the landlord might offer to pay for some or all of your insurance in exchange for you covering his financial liability.

10. Your Financial History

You have a history of financial trouble, you might be at higher risk of having problems paying your bills in the future. When deciding on your renters’ insurance policy, these insurance companies will look at your income and credit score to determine how much coverage it will provide.

The higher these numbers are, the more coverage you will likely be able to buy. However, if your credit is poor or you have had trouble making payments, it can be challenging to convince an insurance company that it will get its money back after covering a claim. In this situation, you may have to pay more for coverage or might not be able to find a policy at all.

11. Your Deductible

When deciding on your policy, you should also consider whether you want to pay a standard deductible. This is the amount you have to pay to receive a payout from your insurer. The higher your deductible, the lower your premiums will be.

If you are in a position where you can easily afford this amount of money, however, it might make sense to put this money back into a savings account so that you can use it for emergencies. Most policies require that you pay the deductible for any theft or damage claim before actual coverage begins.

12. Liability

Your policy will almost always include liability coverage. This is the most important type of liability coverage because it protects your finances when someone covered by your insurance causes damages to others as a result of an accident.

Most policies also include “umbrella” insurance that protects against damage from one accident from happening again by covering future claims and losses caused by the same person or event in the future.

Is Renters Insurance Worth It?

Renters insurance provides an affordable way to protect your belongings from damage, theft, or loss. Before deciding on a policy, however, you must evaluate your personal needs carefully. You should also consider the likelihood of various risks occurring in your area and how you use your belongings daily. By tailoring your coverage to reflect these realities, finding a policy that fits comfortably into your budget and meets all of your protection needs is possible.

You may be interested in: The Basics of Renters Insurance