Most rental property agreements state that any loss or damage to a renter's property is the responsibility of the tenant, as long as the cause was not due to negligence by the landlord. Because of this, it is important to purchase renter's insurance if you can afford it. Policies differ widely from one another, so take out your pen and paper and follow the steps below to compare each of the policies you are considering purchasing.
1. Compare deductibles. A deductible is an amount of money you are responsible for if you file a claim for a loss. The insurance company agrees to pay for costs above your deductible. Policies offer various levels of deductibles. Choosing a higher deductible, if you can afford it, is key to lower monthly payments. With your pen and paper, you can quickly make a chart comparing each policy's monthly premiums at various levels of deductible.
2. Compare limits. Most policies will limit the amount of coverage for items like electronics, jewelry or furniture, but the amount of the limit may be different from policy to policy. Some policies will also put a total cap on the amount of money they will pay out for a loss. Add a line to your comparison chart listing any limits for each policy.
3. Check to see if the policy pays for an item's replacement cost or actual cash value. If a 5-year-old television set is stolen or destroyed, it may have cost a thousand dollars when new, but its actual value is considerably less today because of depreciation. Actual cash value will rarely provide enough money to replace an item. Policies that offer replacement costs for items provide better coverage, but may also be more expensive.
4. Take note of any particularly valuable items you have, such as a diamond ring or professional digital camera. Most policies, for instance, limit coverage for digital cameras to $800, but yours may be much more expensive. You may have to purchase additional coverage for these more valuable items, so make sure to jot down what additional coverage will cost per policy.
5. Compare the standard losses that are covered. All good policies should include coverage for theft, vandalism, lightning, fire, wind and hail. Most policies will also cover explosions, riots, smoke and burst pipes.
6. Check to see if you are renting property in an area prone to earthquakes, floods, tornadoes or hurricanes. Most policies will not regularly cover these types of catastrophes, but require the purchase of an additional rider on the policy to protect you in the case of these events. If you need to purchase a rider, make sure to find out what it will cost, as the cost will vary from policy to policy.
7. Make sure that the policy covers liabilities. For instance, if someone is in your rented home, slips on the porch stairs and injures himself, you could be held liable for medical damages. Liability insurance will cover you for accidents like this. You may have the option of paying for different levels of liability. Make sure to compare this from policy to policy and take note of the various costs.
8. Look to see what policies say about pets. If you are a pet owner, some policies will charge an additional fee if you have a pet.
9. Check to see if the policy will offer a discount if you install smoke detectors and/or deadbolts on the outside doors. This is a good way both to protect yourself and lower your monthly premium.
10. Consider, if available, getting a policy from the company where you already have other types of insurance (for example, life and auto). Most underwriters that offer various kinds of insurance will offer discounts for subscribers with multiple policies.