How to Compare Renters Insurance Coverage

Just because you don't own a home doesn't mean you don't need an insurance plan for your residence. In some cases, your landlord may even require you to get renters insurance coverage before moving in. Whether it's compulsory or not, renters insurance is strongly recommended to protect you financially in the event that your belongings are damaged or stolen. But, if you're brand-new to it and haven't ever looked into renters insurance before, what should you look for and how will you know which plan is right for you? Here are some tips to help you compare renters insurance policies:

How to Compare Renters Insurance Coverage

Pick at least three insurance companies to compare. When it comes to insurance policies, it pays to heed this advice: Not all insurance policies are alike. To make absolutely certain that you're getting the best price for the best coverage and service, never base your decision on price alone. Compare, contrast and make your decision an educated one.

Look at the options that are included. One of the first things you'll learn when you compare renters insurance is that the differences in the policies may not be immediately obvious. Many will offer personal property protection, but sometimes you can opt for additional coverage that may prove to be necessary.

The most common of those options is liability insurance. This type of coverage can help protect you financially against damages or medical bills that you may owe as a result of someone getting injured while in your residence. If you think you don't need liability insurance, think again. While you may not think someone would try to hold you liable, there is always a chance that the unexpected could happen.

Another common renters insurance option is additional living expenses. This type of coverage can pay for your additional living expenses such as temporary housing if the rental home you're living in is destroyed or damaged to the point of being uninhabitable. Imagine having to unexpectedly find a place to live. Where would you stay? Additional living expenses coverage can help cover you for the cost of hotel stays or other expenses if this happens.

Know the difference between actual cash value and replacement cost. Renters insurance is ideal for people who own a lot of stuff. It's even more ideal if that stuff is worth a lot of money. But, in some cases, a prized belonging's current monetary value can differ greatly from what it actually cost you out of pocket to buy. For this reason, it's important to consider whether the policy will reimburse you on an actual cash value or replacement cost basis.

  • Actual Cash Value takes into account depreciation and only pays the amount you might expect to get if you sold the item today. For example, you might have spent $1,000 on a gorgeous sectional couch 15 years ago, but with a policy that pays you actual cash value, you likely will be paid significantly less than that.
  • Replacement Cost is the amount it would cost to buy the same item again new today. One drawback of opting for replacement cost coverage is that it usually costs you a higher premium—but if you own a lot of expensive possessions it took you years of scrimping and saving to buy, you could end up in a better financial position in the end with Replacement Cost coverage.

Once you've performed a side-by-side review of the renters insurance policies, it's time to choose which one will best suit your needs. This process can be entirely subjective, depending on the value of your belongings, so be sure to weigh all factors before choosing.

Bonus Tip: Inventory It's a good idea to keep track of what you own and what each item is worth, so you have that information in the event of a claim. A good tool to utilize is the Allstate Digital Locker, which can help you create your inventory and allows you to keep the information at your fingertips. You can also start your inventory by finding out: What's Your Stuff Worth?

Recommended Resources

Coverage subject to terms, conditions, and availability. Policy issuance is subject to qualifications. Allstate Insurance Company, Allstate Indemnity Company, Allstate Fire and Casualty Insurance Company, Allstate Property and Casualty Insurance Company, Northbrook, IL. © 2013 Allstate Insurance Company, Northbrook, IL.

In-home business policy: This type of insurance rolls homeowners and business coverage into a single policy that eliminates gaps and duplications in coverage. It offers business liability protection and replacement of lost income from fire, theft or other disasters. An in-home business policy may be appropriate for growing home-based companies with business visitors and valuable equipment. It typically does not provide errors and omissions coverage.*

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