You just moved into your new Georgia apartment. You are still trying to unpack, and now someone has put into your head the idea that you might need renters insurance.
Renters insurance? You barely knew that such a thing existed. Do you really need it? Now you’ve got a million questions, on top of the million things you have to do to make your new space a home.
We can help with easy answers to a few common questions on what renters insurance is, what it costs, how it works, and whether you need it. Check out these 6 questions and answers about renters insurance.
1. Why Do I Need Renters Insurance in Georgia When I Don’t Own My Living Space?
If fire or flood takes down your apartment, condo, or rented duplex, that’s too bad — for your landlord. Not to be mean, but isn’t insurance a concern of the folks who own your place?
Yep. If fire or flood (or countless other events) damage the building in which you live — its walls, floors, ceilings, stairwells, furnace, hot water tank, and anything else attached — your landlords are responsible.
But what about your furniture and furnishings, clothing and electronics, art, antiques and jewelry, and the kids’ toys, clothing, and accessories?
That’s on you. That gets to the heart of what renters insurance is. It doesn’t cover the building where you live and its structures. It covers your stuff.
2. How Does Georgia Renters Insurance Work?
Renters insurance pays off if you lose or sustain damage to your possessions due to fire, smoke, flooding, high winds, theft, vandalism, and other damaging events.
Basically, if bad things happen to the material goods in your rented spaces, you’re covered up to your deductible and coverage limits (more on this later). But you’ll also get liability protection.
Let’s say a visitor sues you because they fall on a stair step and break a hip tripping over one of your kid’s toys. You’ll get financial support to pay for legal costs and for damages if you lose your case or settle.
Renters insurance also pays for your replacement expenses if you must find temporary living space while you rehab yours.
If an upstairs neighbor falls asleep with a lit cigarette and causes extensive damage to your unit as well as theirs, your renters insurance will pay to replace the personal belongings you lose, but that’s just for starters.
You also have to find a place to live for the weeks or months it takes to make your apartment liveable again. That could get very expensive, but your renters insurance will pay for your temporary housing until you can get back into your apartment.
3. What Does Renters Insurance Cost in Georgia?
It has to be expensive, right? It covers all of your belongings and legal costs, and weeks or months of temporary housing. Who can afford all of that?
You can. The cost of renters insurance can vary depending on a lot of factors, but it might typically cost less than $20 a month. Sometimes a lot less. It’s quite affordable, especially considering all the protection it offers.
4. How Much Renters Insurance Do I Need?
How much stuff do you have? What’s valuable to you? You’ll want that information to set your coverage limit. That’s the upper end of what your insurance provider will pay on a claim.
You set your coverage limit based on an estimate of the cost value of your goods. To do that, take a home inventory. This is an estimate of the financial value of the things you own. There are several home inventory apps that can guide you through this action.
As brain-frying as it might be, making a home inventory can keep you from seriously miscalculating your coverage limits. The obvious mistake would be to not purchase enough renters insurance and find that you come up short if everything is lost in a flood.
But another mistake might be buying more insurance than you need. After all, the higher your coverage limit, the more you’ll pay for renters insurance. You’d hate to buy $20,000 worth of coverage and then do a home inventory and find that you really only have about $10,000 worth of possessions.
5. How Does a Deductible Work with Renters Insurance?
Your deductible is the amount of money you’ll pay out of pocket before your insurance company takes responsibility for the rest. So if you have a $500 deductible and a burglar steals $1,500 worth of electronics from your home office, your insurer will pay the entire claim minus your $500 deductible. You’ll get $1,000 toward replacing your equipment.
One way to reduce your cost of coverage is to accept a higher deductible. This will make you responsible for a bigger chunk of your covered loss but will reduce your premiums. Which is more valuable to you — lower premiums or a lower deductible? Talk it over with your insurance agent.
6. What Do “Replacement” and “Actual” Cost Value Mean?
These are two different ways of receiving claims payoffs from your insurer. If you have a replacement cost value plan, your insurer will pay what it costs to replace your stolen or damaged item. With actual cost value, you’ll get what the item is worth today after depreciation costs are worked into the equation.
Let’s say your five-year-old computer is stolen. If you have actual cost value coverage, your insurer will figure out what your five-year-old computer is now worth and give you that amount. Maybe you bought your device new for $1,000, but now it’s half a decade old. Your insurer says it’s worth $100 used, so that’s what you get (minus your deductible).
With replacement cost value, your insurer would compensate you for whatever it would cost to buy that same computer model new today. As you can guess, replacement cost value coverage is more expensive, but only by ten percent or so. If it costs you an additional two dollars a month for the more generous level of coverage, wouldn’t it make sense?