Do you rent instead of own your home? Then renter’s insurance is an affordable way to protect your assets. Most policies are about $20, or less, per month — a great value.
For years, most mortgage companies have required homeowners to carry homeowners’ insurance.
More recently, most Denver-area apartment complexes are requiring their tenants to carry renter’s insurance to protect themselves against damage tenants cause to their property.
Required or not, renter’s insurance is a good idea – particularly since it’s so affordable.
A typical renter’s insurance policy provides three types of protection:
- Personal property. This is protection for your belongings. If you’re burglarized, or the victim of a fire or tornado, this coverage would pay up to the policy limits to replace your belongings. I strongly recommend a “replacement cost” policy. Replacement cost means the insurance company will cover the current cost of replacing your property. An “actual cash value” policy – which I don’t recommend – covers the depreciated value of your property. Think Garage Sale prices.
- “ALE” or Additional Living Expenses. This coverage provides you and your family money for other housing or additional expenses associated with living away from your home immediately following a claim. I often see apartment fires on the news and the tenants are sleeping in a high school gymnasium provided by the Red Cross. If you have a renter’s policy with ALE, you’d have the option to be sleeping at a nice hotel.
- Liability. This is the coverage your landlord wants to see. It covers expenses incurred when you or a family member cause damage to another party. The coverage extends beyond your four walls. If you’re downhill skiing and crash into someone, your renter’s insurance liability may pay out. I’ve also seen renter’s insurance claims when a stray golf ball causes property damage or bodily injury to another person
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