A version of this article was originally published on Curbed NY.
For many apartment hunters, renters insurance is in the back of their mind as something they should have but haven't gotten around to yet. There's no blanket rule or law requiring that you purchase a policy for your apartment, and many renters assume their stuff will be covered by their landlord's policy if anything goes wrong in the building.
Here's some bad news: If anything damages your personal property and you don't have renters insurance, you've lost it for good. The good news, though, is that protecting your stuff through renters insurance is fairly easy and not that expensive.
"Most people don't realize it's inexpensive and widely available," said Jeff Schneider, president of Gotham Brokerage. Gotham Brokerage specializes in renters and apartment insurance, but Schneider says that every insurance company offers it. Once secured, renters insurance will protect you from three things: coverage for personal possessions, liability protection, and additional living expenses.
The first concern of securing renters insurance tends to be cost. But Schneider insists it's not that expensive: "You can get minimum coverage for under $200 a year," he said. Renters coverage starts as low as $125 a year. Essentially, what you pay for a policy is based on the value of your belongings. The higher your property value, the higher your renters insurance, and vice versa.
Standard coverage levels for property damage range from $25,000 to $50,000, although it can go higher. The policy will also come with a deductible, which is what you'll pay out-of-pocket before the insurance coverage kicks in. Your policy will offer deductibles of a specific amount, typically from $500 to $2,000. The larger the deductible, the lower the premium charged.
So before you secure a policy, you'll have to take stock of all your stuff. The easiest way to determine the value of your personal possessions is by creating a home inventory. Track your furniture, clothing, books, electronics, appliances, kitchen utensils—pretty much everything you own that didn't come with the apartment and mark its estimated value.
Schneider says the best way to to do this is by taking photos of your stuff and keeping track of credit card statements. Check if your insurance company has a mobile app with a home inventory tool. Apps like Sortly, available for both iOS and Android can also help you track possessions for insurance and moving purposes. Keeping this list up-to-date will make it easier to file an insurance claim in the future as well.
Finding the right policy
Once you've taken stock of your personal inventory, you'll decide what kind of policy you want. There are two kind of coverage: replacement cost coverage or actual cash value coverage. Actual cash value considers what your items are worth including depreciation, not what you bought them for. A replacement cost policy will pay the cost of replacing your possessions without accounting for depreciation.
Schneider recommends the replacement cost policy, despite a slightly higher price uptick of about 10 percent. It's considered worth the extra expense as the value of most items tends to depreciate quickly. That MacBook you bought two years ago is now worth significantly less than what you paid for it.
Once you've secured your policy, your insurance will protect you against losses from fire or smoke, lightning, vandalism, theft, explosion, windstorm, and certain types of water damage. If there's damage from a burst pipe, you're covered. But if you live in a flood zone, note that most renters insurance policies do not cover floods. (Flood coverage comes from the federal government's National Flood Insurance Program and a few private insurers.)
Earthquakes typically aren't covered. Sometimes jewelry, or electronics used for business purposes, will not be covered. It pays to do your research here to know exactly what your policy accounts for. There's always the option to add a "floater" to your policy in the case of expensive jewelry, collectables, or equipment. The floater provides additional insurance for valuables and also covers them if they are accidentally lost.
On top of coverage for personal possessions, renters insurance comes with liability coverage usually up to $100,000. Basically, this will cover you against lawsuits for bodily injury or property damage done by you, your family members, and even your pets. If you've caused a leak that damages your neighbor's apartment, your neighbor's damage is covered by your policy.
Some policies will refuse to cover dogs, especially certain breeds, not wanting to be liable if your dog bites a stranger. Or, your premium will be higher with certain types of pets. And most policies will not cover anything that happens under a sublet or if someone is renting your place through Airbnb.
While owning a pitbull may cost you more, there are certain things that can potentially lower your premium. These include security systems, deadbolt locks, good credit, and holding multiple insurance policies. Discounts will depend heavily on your provider.
Finally, your coverage will provide additional living expenses if you are in a situation like this New York City gas explosion a couple of years ago (the renters we talked to after the explosion did not have insurance, but wished they did). That means you've got coverage for hotel bills, temporary rentals, restaurant meals, and other expenses while your home is being repaired or rebuilt. Many policies have a timeline or a price cap for this, but it's a valuable resource in an emergency situation.
A single policy will typically cover your spouse or any immediate family members living with you, but roommates are much trickier. Schneider says renter's policies will not cover more than two unrelated people, so if you're living with four other roommates, you'd need more than one policy to cover the entire apartment.
"If you name a roommate on your policy, any claim check will go out to both of you," he said, even if your roommate has moved out or none of their possessions were stolen. "So you want to be sure you trust anyone you add to your policy."
And when you're ready to move out, renters insurance isn't hard to cancel. Sometimes policies will transfer to new apartments, so be sure to be in touch with your insurance agent if you'd like to carry it over.