Money Management Tips
Money at 30: Spring Weather is a Great Reminder About Renters Insurance
Since moving to Springfield, Missouri, I’ve become mildly obsessed with following the weather. I regularly keep tabs on my local National Weather Service’s Twitter, watch Facebook’s live streams they hold before certain events, and of course have a favorite network affiliate meteorologist. This interest isn’t so much driven by passion but by fear as I’ve never lived in a place where tornados seemed like much of a threat. Consider that Twister was the first PG-13 movie I ever saw, you can imagine just how much this possibility scares me.
I say all of this because, with spring in full force, the likelihood of severe storms is increasing for many parts of the country. What does that have to do with finance? Well, incidentally, another thing I did the first time when moving to Springfield was purchase renters insurance. Regardless if you’re located in a storm-prone area or not, if you rent your home, now may be a great time to look into a renters insurance policy of your own.
What is Renters Insurance and Why is it Important?
Renters insurance is essentially a policy that covers your possessions, allowing you to get reimbursed should they incur damage or get stolen. In fact most policies are wide-ranging, protecting against loss from fires, vandalism, and yes tornados. That said you may need to add special coverage for things like floods or earthquakes.
Despite how handy these policies can be, less than half of renters actually carry them. That likely stems from a misconception about how they work. Because renters traditionally don’t need to pay for repairs damaged structures or appliances, many assume that a renter’s insurance policy is unnecessary. In reality, renters insurance is less about your abode and more about what’s in it — a fact that can make all the difference when you’re considering the benefits.
How much is renters insurance
Another surprising aspect of renters insurance is that it can be quite affordable. Typically you can find a basic policy for $5 to $20 a month (although some can go higher). Of course this figure will depend on a number of factors, including where you live, how much coverage you need, and what type of policy you choose.
What does replacement value and actual cash value mean?
Speaking of different policy options, you may be faced with a choice between a replacement value renters insurance policy and an actual cash value policy. Simply put, a replacement value policy will reimburse you the amount you’d need to purchase a new version of a covered item that’s been damaged or stolen. Meanwhile an actual cash value policy would only reimburse you for what the covered item was worth at the time, factoring in things like depreciation, condition, etc. Since the replacement value of your items is typically much higher, these types of policies tend to be more expensive. At the same time they’re also probably what most renters would prefer were they put in the unfortunate situation of having to make a claim.
What companies offer renters insurance?
The good news for those seeking renters insurance policies is that they are now relatively easy to find. For example a great place to start is with your car insurance provider. Although they might not offer policies themselves, they may have an arrangement with a different insurer, allowing you to bundle your coverage for a discount. Elsewhere there are online services such as Lemonade that can also help you find a policy that’s right for you.
For a close look at renters policies and a roundup of companies offering quotes, be sure to check out my full guide to renters insurance.
While the spring season can bring beautiful blooms and lovely temperatures, it also comes with an increased chance for severe weather in many parts of the country. Just as having a plan and staying “weather aware” can help protect you from such storms, having renters insurance can shield your possessions and prevent major monetary loses. So, with more unfortunate forecasts on the horizon, now may be a great time to look into a policy of your own.
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