You just moved into your first apartment, and you are asking yourself if you should purchase renters insurance. The better question is, can I afford not to? The landlord will have a policy on the physical structure where you live, but your belongings inside are your own responsibility. Could you afford to replace everything you own if a catastrophe occurred? When you decide that having renters insurance is the answer, there are various factors that affect the price of a renters insurance policy.
How much coverage you choose has the most impact on the price of the policy. You need to insure all of your property because, in case of a fire, you could lose everything. If you have some particularly valuable items such as expensive jewelry or antiques, they probably won�t be covered in your general renters insurance policy. You may need a rider to include extra coverage for those items not included in the general policy.
This is one of the factors over which you do not have a lot of control. The cost of insurance fluctuates from one part of the country to another. However, if you live in an area that is prone to flooding or earthquakes, those losses are usually not covered by a standard policy. Insurance will cost you more because you will need a rider or separate policy for those events in addition to your standard policy.
A deductible is the amount you pay for a loss before the insurance coverage starts. The more you are willing to pay for the deductible, the less the insurance premium costs. This will keep your cost down, but be sure that you can afford the deductible if you have a loss.
The difference between actual cash value and replacement cost insurance has an influence on the cost of your insurance premium. When your policy states that it will pay actual cash value, it means that it pays for the value of the item at the time of loss, minus depreciation. For example, a microwave you bought for $250 four years ago may now only be worth $75. And $75 is what you will receive under your ACV insurance policy � which most likely won�t buy you a new microwave.
On the other hand, replacement cost coverage allows you to replace your lost or damaged possessions with similar items at current market value. Replacement cost coverage costs more in premiums, but you would have enough of a payout from your insurance company to replace your stolen or damaged item.
Most insurance companies offer discounts for such things as having smoke and fire detectors, sprinkler systems, fire extinguishers, burglar alarms, and dead bolts on all exterior doors. When speaking with an agent, be sure to ask what discounts are available and which ones you qualify for.