No matter how you decide to purchase your policy, be sure to keep the following advice in mind:
Insure for replacement cost, not actual cash value. Actual cash value is how much a possession is worth after depreciation is factored in; replacement cost is what it would cost to buy that possession today. You’ll save money on your premium by insuring for the actual cash value of your belongings, but you’ll end up paying a lot more if you suffer a loss and need to replace your belongings.
Shavon Roman, a licensed insurance agent and founder of the financial consulting company Heal. Plan. Invest., says to think of it this way: If you bought a TV for $500 two years ago, a policy paying out actual cash value may only give you $15 because of how much that model has depreciated. But if your policy pays out the replacement cost, you’ll get enough money to buy a brand-new model the same size as your old one.
Get separate coverage for valuable items. Policies typically cover individual items only up to a certain amount (often $1,000 to $2,500 per item). In 2010, before she became an insurance agent, Roman learned this the hard way. After her apartment was broken into and her valuables were stolen, her renters insurance policy covered most of her losses, but reimbursed only $2,500 for her $12,000-plus engagement ring. She says that adding a rider to your renters policy to cover expensive items such as jewelry and computers might add a few extra bucks to your premium, but is well worth the cost.
Keep roommates on separate policies. Though it’s possible to be listed on the same policy as your roommate, experts we spoke with said they’d recommend keeping separate policies. “Property is not usually owned by multiple roommates, so it’s just cleaner to have separate policies,” says Craig-Mason.
Look for discounts. Most insurance companies offer discounts based on several criteria. They can vary by company, so it pays to ask. For instance, consider paperless billing and paying annually rather than monthly. Also, having safety features in your rental can translate to savings, such as security systems, smoke detectors, or deadbolt locks. Having good credit scores, having a long history with a company, being over the age of 55, or setting a higher deductible can help with discounts as well.
