Do I need renters insurance?

I never thought I needed renters insurance either, until my sister’s apartment flooded while she was away for the summer and all her belongings were destroyed. And I mean all. Computer, printer, shoes, clothes, photo albums, stereo all had water damaged and needed to be replaced. Luckily she had renters insurance (although it was an actual cost value coverage policy) and replaced her belongings with their payout check.

Here are a couple of key points about renters (or tenant’s policy) insurance:
• Your landlord or condo association policy covers the building, but not your things.
• Most policies cover damage due to fire, windstorm, hail, smoke, theft, vandalism, frozen plumbing and vandalism to name a few.
• Most policies include liability protection, which would cover any expenses (medical or legal up to your liability limit) if someone in your apartment were to hurt themselves.
• Regardless of the policy you choose, it is important to take a complete inventory of your belongings. Go through your apartment and take pictures of your things, writing down serial numbers and value for big ticket items. Store receipts for expensive items in a safe place.
• Renters insurance can seem like another big expense but there are ways to manage the cost. Taking a higher deductible will lower your monthly premiums, as will choosing “actual cash value” vs. “replacement cost” coverage.
• Don’t forget to mention SimpliSafe when you shop for your renters insurance. Most insurance companies offer discounts for “protective devices,” including smoke and fire detectors, fire extinguishers and home alarms.

To respond to maggie's comment about actual cost coverage, here is a brief summary of the difference between actual cost coverage (ACV) and replacement cost coverage. ACV coverage will pay you only what your property was worth at the time of the loss. So if you claim a stolen computer or flood-ruined shoes, the payout amount will be quite a bit less than what you paid for the items because both electronics and shoes lose their value very quickly. Replacement cost coverage, on the other hand, will pay you what it actually cost you to replace the item, minus your deductible. And if you have especially valuable items (diamond ring, antiques, etc) mention them when you take out your policy as you may need additional coverage for these items.