A renter’s insurance policy covers the loss or damage of your personal property and may also provide liability coverage, protecting you if someone is injured at your home. Despite the essential protection renters insurance provides, just 41 percent of renters purchase coverage, according to the Insurance Information Institute.

When you start shopping for a policy, remember these basics:

You need coverage:


Imagine having to replace all of your possessions after a fire or break-in. The cost to purchase a new television, laptop, jewelry and furniture would add up quickly, right? Renters insurance helps pay those costs, minimizing the financial impact of an unexpected loss. Some landlords may require renters insurance as a condition of your lease.


All policies are not created equal:

There are two different kinds of renter’s insurance policies: One covers the “actual cash value” of your items and the other provides “replacement cost coverage” for your personal property.

As its name suggests, a policy that covers actual cash value will reimburse you for the current (depreciated) value of your items. The value of older items might not yield a sufficient payout to replace them without incurring out-of-pocket costs. Policies that cover replacement cost value will pay to replace lost, stolen or damaged possessions with similar new items at current prices, without deducting for depreciation.

Policies that cover replacement cost value tend to have higher premiums than those that cover actual cash value. When comparing rates, be sure to take into account the type of payout the policy covers.


You might need additional coverage:

A standard policy might not be enough to cover items such as jewelry, guns or collectibles. Double-check the limits on a policy and consider purchasing add-on coverage — also called a floater or rider — to insure more expensive items that fall outside standard coverage limits. You may need documents such as receipts or appraisals to prove the value of the personal property to be included in the add-on coverage.


It covers more than personal property:

Liability insurance is included with most renters insurance policies. The coverage provides protection if someone is injured while visiting the place you rent. You can add personal liability umbrella coverage for an extra layer of protection.  


Costs are reasonable:

Insurance costs vary depending on the type of coverage you purchase (a policy that covers replacement costs with an add-on for heirloom jewelry will cost more than a policy that covers actual cash value). Premiums also vary from state to state. Coverage might be less expensive than you think. The Insurance Information Institute reports that the average annual premium for renters insurance is $190.


You might not need coverage:

Before purchasing renters insurance for a college student, check your homeowners insurance policy. Some policies cover students living in dorms or other campus housing, which means you may not need a separate renter’s policy. Always check with your Farm Bureau agent to see what coverage would be best for you. Renters insurance might not be top of mind when you’re settling into a new place but a policy provides peace of mind that your belongings are covered.