Whether it’s your first time to live on your own, or had been doing it for years, having renter’s insurance is one fact you should know about and take into consideration.

Think about this. You come home and find out that your room/condo/apartment has been robbed. Of course, all your prized possessions were taken excluding the kitchen sink. Better yet, try to picture this. You order dinner and the delivery guy accidentally stumbles on the stairs and has a bad fall. Now instead of just the food you ordered he is also charging you to pay for his accident. What do you do? This is where renter’s insurance comes in. Definitely, this is one roommate that you won’t mind having to stick around.

What is renter’s insurance? By the name alone, it’s a type of insurance that protects renters like YOU. This policy pays to replace your belongings if they are stolen, damaged or destroyed under certain conditions.  Renter’s insurance protects your property and most of all, you from unforeseen situations and circumstances that may arise.

There are two types of renter’s insurance policy. The actual cash value insurance and the replacement cost insurance. With these 2 options, you can decide on what type would fit you best.

Actual cash value insurance is a policy that reimburses you the decreased value of your lost, stolen or destroyed belongings. Meaning, if a robber steals your laptop you bought for $1,000 and now it’s only worth for $500, then the insurance company will only give you $500 for the laptop.

However, if your rented apartment’s ceiling gets blown over by wind or is damaged by hail in a storm, those are covered by your landlord. Yet, if you have a new plasma TV damaged due to your ceiling getting blown over, you have to think about 2 things: a temporary place to stay and how you’d replace your new plasma TV. Not to worry, these are what would be covered if you would have renter’s insurance.

Replacement cost insurance is a policy that pays you the amount of money you need to substitute the items that were lost or stolen from you. These often result to getting a bigger amount of money from your insurance company. Although it costs around 25% more than the actual cash value insurance, if you can well afford, it’s much more worth it.

If you’re the type of person who likes to collect jewelry, electronic gadgets and other expensive stuff, then the basic renter’s insurance policy may not actually work for you as it may not provide enough coverage for your valuables. Most policies will only cover $1,000-2,000 worth of stolen jewelry. The same would be for other expensive items and gadgets. For this, you can get the special supplementary coverage or sometimes called as the article coverage.

The dollar amount of coverage, deductible, actual cash value or replacement cost and the location and previous claims are also a number of things you need to consider when purchasing your renter’s insurance. The Dollar amount of coverage is a main factor in dealing with the price and coverage. For all your property or possessions, a fixed amount will be decided not the dollar amount for each piece of property.

As for the deductible, this is the main factor to consider when it comes to cost and how much you are willing to pay out of pocket before your insurance comes in. Coverage subject to the deductible is almost everything except liability coverage, like paying for someone else’s medical expense in the event that person slips in your staircase and needs medical attention.

Actual cash value or replacement cost are the factors that your insurance would consider for your actual reimbursement. The basic policy will pay you the actual cash value replacement. However, if you choose replacement cost you will get an actual replacement of your lost or damaged property. For example, the TV you bought 3 years ago will be replaced with the amount it would cost to buy a similar TV. Yet items like jewelry and firearms have limited coverage so it’s better to have these items placed on a separate policy.

For location and previous claims, if your rented apartment/condo is located in an area exposed to theft, chances are your insurance will charge you more as well, if a previous neighbor or renter have had a large amount of claim, this could very well raise the cost of your policy.

You may sometimes feel that your personal property is not worth enough to insure. Remember having liability coverage is well worth  renter’s insurance. Like all insurance policies, you can check with your agent on the specific coverages. These policies vary between companies and states.