It’s no secret that rent is expensive. Renting an apartment or home near your job in the city can be even more so. Luckily, renters insurance isn’t always expensive. In fact, it’s a rather cheap necessity that every young professional should invest in.
How Much Does Renters Insurance Cost?
The cost of renters insurance varies by state, but the estimated average of the US is $187 a year. Texas is unfortunately on the high side of renters insurance at $228 a year ($19 a month.)
Is Renters Insurance Worth It?
Say someone breaks into your apartment while you’re out. They steal your $1200 laptop, $300 game console and any money or jewelry you have lying around. You could be facing a loss of up to $2000 just from one break-in. If you don’t have renters insurance, you’re going to have to replace everything you lost of out pocket. For someone in the workforce, losing a laptop is an absolute nightmare. If you have renters insurance, however, you can choose to receive either the actual cash value or replacement cost value of the belongings you lost.
Be aware that you won’t always be entirely covered. If an incident happens, you may be paying anywhere between $250-$1000 out of pocket for your deductible. This means you must pay this amount before the insurance company will step in.
What Does Renters Insurance Cover?
A general renters insurance policy covers:
- General liability: This is in case you cause bodily injury to someone or damage their property.
- Personal property: This covers your property in case of covered perils including fire, theft, vandalism, etc.
- Additional living expenses: This helps pay for living expenses if you have to move somewhere else while the rented property is being repaired.
Replacement Cost Value vs Actual Cash Value
The difference between replacement value and cash cost value is fine. With cash value, the insurance company decides how much cash your insured belongings are worth and offers you that amount of cash when you file a claim for damage or loss due to covered perils. This value is susceptible to going down over time through depreciation, however. If the cash value of your laptop has dropped to $600, that may be all the insurance company offers.
With replacement cost value, the insurance company replaces the items as though they were new. So, your $1200 laptop will be either replaced with the same laptop or you will receive $1200. This policy is more expensive.