- Renters Guide
- For Owners
Contrary to popular belief, your landlord's insurance does not cover your personal belongings. It only covers the cost of the structure itself. Renters insurance is a smart and inexpensive way to ensure that, in case of fire, a broken pipe, robbery, infestation, or dozens of other nightmare scenarios, the loss of your most precious possessions--as well as all the other things, like frying pans and sweaters and wall clocks and sheets, that turn an empty space into a home--need only be temporary.
Renters insurance costs, on average, about $16 a month (which is price of ONE cocktail at some places these days), and yet year after year, studies show a shockingly large percentage--less than half--of all residents in NYC apartments neglect to sign on to any sort of policy.
Does rental insurance makes sense for you? Well, only you can answer that, but we at Urban Edge think that, really, given the low cost and high security most policies afford, renters insurance makes sense for pretty much everyone. Many companies will even let you pay the premium in installments, rather than a lump sum, making it budget friendly to everyone.
Actual Cash Value vs. Replacement Cost
Renters insurance usually falls into two categories: "actual cash value" rental insurance, which covers your property minus depreciation (so if you paid $300 for that coat four years ago, and it's destroyed in a fire, expect to get considerably less in your settlement); or "replacement cost" renters insurance, which gives you enough enough of a settlement to re-purchase everything loss at today's prices (so: $350 for your coat, say).
Premiums for replacement cost rental insurance are typically about 10% more than actual cash value policies. And remember, if you have a roommate with renters insurance, that doesn't mean that your possessions are covered.
Doing a Home Inventory
The best way to figure out which type of renters insurance--either actual cash value or replacement cost--is best for you is to start taking a home inventory. If you have receipts for your big-ticket items--appliances, furniture, computers, jewelry, etc.--make copies, and it's a good idea to make a video tape of the entire contents of your rental apartment, including whatever's inside closets and drawers. Obviously, keep this information someplace other than your apartment--such as a relative's home, or even better, a safe deposit box.
There are also online tools, such as knowyourstuff.org, that can help you organize your lists and figure out which items are worth what. The minimum coverage of most renters insurance policies is usually around $25,000. If the price of re-buying all of your most essential items exceeds that figure--and it probably will--you might want to consider replacement cost renters insurance.
Renters Insurance: "All Peril" or "Named Peril"
Another decision you'll have to make when purchasing rental insurance is whether you want your possessions covered from "all peril" or "named peril", which work pretty much exactly they sound. All peril renters insurance coverage entitles you to a settlement under all circumstances except those specifically named (usually earthquakes and floods). So, you get robbed, or there's a fire, you're covered. And if a party guest spills grape juice all over your yellow couch? You're covered.
Named peril renters insurance covers you only in events specifically listed in your policy. All peril coverage is, obviously, a bit more expensive, and it's really more of a lifestyle consideration, as to which one would best for you.