Why all renters need renters insurance

Living in an apartment often has its financial perks. Utilities and at least part of the electric bill are often included. There's no yard maintenance to take care of. You don't even have to replace major appliances when they break; that's typically done by the landlord. One area no renter should skimp on, however, is renters insurance. Here's what you need to know about getting a rental insurance policy if you don't already have one.

A 2006 survey conducted by the Insurance Research Council found that less than half of all renters have a rental insurance policy. Why? Experts speculate that many renters think their landlord's insurance policy covers their belongings; this isn't true. Some may think it's too expensive. If you've been putting it off because of the cost, you'll be surprised to find that renters insurance is very affordable. Most policies cost $200 a year or less. Discounts are offered through most carriers for those with other insurance policies, such as auto insurance.

When inquiring about policies, you'll need to find out if yours covers the replacement cost of the item or the actual cost. For instance, many renters insurance policies put a cap on jewelry at $1,000, but a piece of jewelry can easily cost more than that. Additional riders can be purchased for more expensive items like fine art or jewelry. In addition to covering the usual renting calamities like fire or theft, renters insurance offers liability in case of a lawsuit resulting from bodily injury while in your residence.

Before you purchase a policy, you'll need to conduct an inventory of your belongings. There are many home inventory checklists available online to help you remember all your items. A video walkthrough can be helpful because there will likely be things that your eyes won't notice due to familiarity. Estimate what it would cost to replace all of these items and confirm your policy covers at least that amount. Update your policy whenever you make additional purchases.

Photo courtesy of Matt Barber via Flickr.