As much as it might seem an unnecessary expense for someone who doesn't even own their own home, tenant (or renters') insurance is essential. Get tenant insurance as soon as you move into your apartment. If you are attending university, check to see if your parents' policy will cover you. As a tenant, you are liable and legally responsible for any damage to your part of the building and to others who live there.
Think about it. Your landlord has insurance only on the building. You are responsible for insuring your belongings. And before insisting that what you own doesn't amount to a hill of beans, consider the cost of replacing your DVD or CD collection if it were destroyed by fire. Your tenant insurance would not only pay for the damage you caused and replace your belongings; it would also pay your additional living expenses if you had to live elsewhere while your unit was being repaired.
What Does It Cover?
Tenant's insurance will insure all of your property within your apartment. Some policies will also cover your property when it's outside of your apartment. For example, if your bike is stolen when it is parked at your friend's apartment, your tenant's insurance may reimburse you the cost of your stolen bike. Tenant's insurance also covers fire or water damage.
Consider a replacement-cost policy. If your bike is stolen for example, a replacement-cost policy would foot the bill for you to buy a new bike, similar in quality to the one you lost. Without this, you would receive an amount equal to what your bike is worth minus depreciation, which probably wouldn't be enough to buy a new bike. A replacement-cost policy will increase your premium slightly, but it can be well worth it.
There are limits on reimbursement for expensive items. If you have computer or stereo equipment or costly jewelry, you may want to insure those separately. If you have items of great sentimental value, they obviously can't be replaced and you should put them in a safe deposit box.
Your insurance should also cover personal liability. Most tenant's insurance policies will cover all non-auto accidents, including accidents that happen away from your apartment. Let's say that before your bike was stolen, you accidentally hit a pedestrian with it and he or she sued you. You are protected against lawsuits because you have renter's insurance. Although coverage varies, $300,000 is standard coverage for personal liability. Tenant insurance also provides coverage for your personal liability for the safety of others while they are in your rental unit. And it covers your liability if you accidentally cause damage to an adjoining unit.
How Much Does It Cost?
For as much as it covers, tenant's insurance is relatively inexpensive. An average policy should only cost a couple hundred dollars. Compare that with auto and health insurance and it's a bargain.
Make Claims Easier
As soon as you obtain tenant’s insurance, document your belongings. Make a videotape of everything you own or photos of everything you would want replaced. If you can't do that, write a detailed list of your things. If you lose your belongings in a fire it will be nearly impossible to remember everything you had. A record of your things will be invaluable in settling claims with the insurance company.
Keep your tapes, photos or written list somewhere outside of your apartment - at a friend's residence or with a relative. If you have a fire, you don't want these records destroyed as well.