For whatever reason, typical renters don’t seem to realize the true value of their personal belongings. Most renters fail to sign up for rental insurance and end up regretting it down the line. If you don’t currently own rental insurance, it’s a good idea to at least call up your insurance company and see what your options are. A theft, disaster or an accident could empty out your bank account unless you are properly covered.

Home renters insurance is usually pretty cheap

Home renters insurance premiums are relatively inexpensive compared to other kinds of insurance. The amount of coverage you can get for such a small investment is impressive. The average plan covers damage to your personal belongings, liability in case you damage someone else’s property as well as a substantial medical payment for injuries.

How does home renters insurance work?

Home renters insurance policy kicks in to help you out after a fire, flood, storm or an explosion damages your personal property. A home renters insurance plan will also pay for you to replace your stuff after a robbery.

Depreciation and home renters insurance

Insurance companies will analyze the cost of whatever you lost after an accident to determine the real value of your stuff at the time of your loss. But don’t expect to get a huge payout for that TV set that you bought back in 1997. The insurance company will only pay you the approximate amount you would make if you sold your TV as used electronic equipment.

Deductibles and home renters insurance

Your deductible is the amount that you agree to pay out-of-pocket to replace your belongings. Going back to the example listed above, you’d have to pay an amount equal to your deductible towards purchasing a new TV if you needed to replace it. The insurance will only pay for any costs above and beyond the deductible amount. Lower deductibles mean higher premiums, so consider what you are willing to pay after an accident to replace your stuff before you buy.

Additional living expenses

If you live paycheck-to-paycheck and don’t have much money in your savings account, additional living expenses coverage can save the day after a disaster. If you are forced to relocate because of a fire, flood or other type of disaster, home renters insurance will cover the cost of temporary lodgings, meals and other expenses. The amount you can get to pay for additional living expenses usually depends on how much personal property you own.

Common exclusions

Flood and earthquake damage usually isn’t covered unless you opt in to pay for additional riders. If you live in a high risk area where flooding and earthquakes occur frequently, the cost to cover these kinds of damages can be pricy. Still, if you stand to lose a lot of money if a flood or earthquake hits, the cost may be worth the risk. If you aren’t sure what to do, talk to a trusted insurance agent and pick out a coverage option that’s right for you. Consider getting free renters insurance quotes online before making a decision.