Coverage for Renters 

You're moving into a new apartment and you have a lot to do: setting up telephone and cable service, letting people know your new address, deciding how to arrange your living room — the last thing you're thinking about is insurance.

If you live in a condominium or rent an apartment, your landlord's or condo association's insurance should cover damages to the building — meaning the structure itself. But such a policy only covers their building and not your belongings. That's why you should have renter's insurance. Regardless of whether you live in a house, condo, or apartment, replacing your stuff or defending yourself against a liability lawsuit can take a big toll on your bank account.

Basic home insurance policies are generally known by their number. Both the HO-4 (for renters) and HO-6 (for condo owners) policies cover losses to your personal property from 17 types of perils: 

fire or lightning 
windstorm or hail 
explosion 
riot or civil commotion 
aircraft 
vehicles 
smoke 
vandalism or malicious mischief 
theft 
damage by glass or safety-glazing material that is part of a building 
volcanic eruption 
falling objects 
weight of ice, snow, or sleet 
water-related damage from home utilities and electrical surge damage.

Sounds like quite a lot, doesn't it? You may notice, however, that floods and earthquakes aren't on the list. If you live in an area prone to those, you'll need to buy a separate policy or a rider on your renter’s policy. In some coastal regions,where hurricanes can cause mass destruction, you may also need to buy aseparate rider to cover you from windstorm damage. 

One thing you want to look at when you shop for insurance is whether the company will be writing "actual cash value" (ACV) or "replacement cost coverage." As the name implies, ACV coverage will pay only for what your property was worth at the time it was damagedor stolen. So, if you bought a television five years ago for $300, it would be worth significantly less today. While you'd still need to shell outabout $300 for a new one, your insurance company will pay only for what the old one was worth, minus your deductible. 

Replacement cost coverage, on the other hand, will pay for what it actually costs to replace the items you lost. Usually, you'll have to pay out of your own pocket to replace your damaged items and submit the receipts to the claims adjuster for reimbursement. Even so, you'll still get a bigger chunk of change back than if you bought ACV coverage. 

In some places, most companies write ACV coverage. In others, they'll quote you replacement cost coverage by default. Replacement costcoverage will cost you more in premiums, but it will also pay out more if you ever need to file a claim. 

Things like jewelry, antiques, and electronics may be covered up to a certain amount, but if you have some items that are unusually expensive, like a diamond ring, you'll probably need to purchase a separate rider. If you don't talk to your agent about an expensive item when you buy the policy, you probably won't be able to recover the loss.

If your apartment becomes unlivable due to a fire, burst pipes sending water everywhere, or for any other reason that is covered by your policy, renters insurance will cover your "additional living expenses." Generally, that means paying for you to live somewhere else, such as another apartment that is in a similar price range as your original place.

This coverage has a limit of about 30 to 40 percent of the total value of the policy. So, if you're insured for $100,000 your "additional living expenses" limit will be $30,000 or $40,000, depending on your individual policy. Your insurance company will continue to pay while your home is being repaired or rebuilt, or until you permanently relocate. However, sometimes 12 months is the longest an insurance company will continue paying. Other times, you're limited to what the insurance company considers a "reasonable length of time." 

Other benefits

Renters insurance has additional benefits that might not immediately come to mind. If your waterbed bursts and the water ends up in the
apartment below yours, renters insurance will cover the damage. Liability protection is also standard with most renters policies. This means
that if someone in your apartment slips and falls, you're covered for any costs, up to your liability limit.

How are costs determined?

Just like any other insurance policy, your premium depends on a number of factors: where you live, your deductible, your insurance
company, and if you need any additional coverage. However, if you don't need any extra coverage for expensive jewelry or computers, and you
shop around, you probably will pay somewhere between $150 and $300 per year for coverage. That will get you about $30,000 to $35,000
worth of coverage for your personal possessions and somewhere between $100,000 and $300,000 worth of liability protection. 

What you can do to save money?

Renters and condo policies usually cost less than homeowners policies. While some factors will be out of your control — where you live or what your building's made of — there are still ways to keep your premium low. Increasing your deductible (the amount you pay before your coverage kicks in) is one way to keep your costs down. However, be sure that you'll be able to afford whatever deductible you choose. 

If you're thinking about getting a dog, you may want to think twice. Some insurance companies are skittish about writing policies for owners of certain ferocious breeds: Rottweilers, pit bulls, and Doberman pinschers might make getting renters insurance hard, especially if they've bitten people in the past.

Most companies offer a discount for having "protective devices," including smoke and fire detectors, burglar alarms, and fire extinguishers. 

Some companies may offer policyholders that are over 55 and retired a discount. Other companies may offer a discount if you get combined auto-renters policy.