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Renters insurance may seem expensive or even esoteric if you’re among the far more than two-thirds of tenants who lack it. But it’s the most effective way to avoid losing thousands of dollars if you’re robbed or your apartment is damaged by water or fire.

Apartment dweller Rose Lichter-Marck, 28, had to pay cash to replace all her furniture, housewares and books after a fire in her old building that started with an electrical issue on yet another floor. Cleaning the smell of smoke out of her clothes price an additional $2,000, even with a “pity discount,” since she didn’t have insurance, she said. Then she had to stay with friends and relatives until she discovered a new apartment.

With insurance, the whole experience would have been much less painful – and much less high-priced.

“They would have put me up in a hotel, paid for my cleaning and moving fees and even the broker’s fee for a new place,” Lichter-Marck said.

A fundamental policy can be had for 50 cents a day, roughly the price of 1 huge pizza per month. But numerous renters, mostly young adults, feel – incorrectly – that their stuff isn’t worth sufficient to insure, according to Apartments.com, which found in 2010 that 70 percent of tenants do not acquire renters insurance.

“If some thing had been to take place, it’s going to cost a lot additional than persons imagine to replace dishes, computers, a big-screen TV, clothing,” said Ben Rabinowitz, an agent with Allstate Insurance Co. in Pikesville, Md. “It begins to genuinely add up.”

Renters insurance covers far more than what’s inside your apartment. Say you take place to leave the bathtub running too long and water damages your neighbor’s ceiling below; renters insurance will cover the repairs. Or, if your laptop is stolen from your automobile, that’s generally covered by renters or homeowners insurance – and not auto insurance.

Here are five steps to take if you’re contemplating renters insurance:

l INVENTORY YOUR POSSESSIONS: Go room by room and photograph every thing you own to get a sense of how much it would cost to replace all your issues. While you’re at it, write down the serial numbers of all your electronic devices and appliances to guarantee you’re fully reimbursed when you do decide on to acquire insurance and you suffer a loss.

l SEEK OUT DISCOUNTS: Take note of any unique safety precautions within your building, for instance deadbolt locks, a 24-hour doorman or a sprinkler system, which will earn you a break on your monthly premium. In case you acquire coverage from the exact same business that insures your car or delivers you other sorts of coverage, which will earn you a multi-policy discount.

l Think about PARTYING: Should you like to entertain, renters insurance could be particularly helpful. Most policies will offer your guests medical coverage, so if someone visiting your place slips and smacks his head on your kitchen counter, his trip to the emergency room is going to be covered. (And it’s no-fault coverage, so you won’t need to wait for a court to choose who is liable just before your insurance kicks in.)

l Decide on REPLACEMENT VS. ACTUAL VALUE: Most insurers will cover either your belongings’ actual cash value or what it would price to replace them. A cash value policy will probably be less expensive, but the payout for things you might have to replace might be reduced by how much they’ve depreciated since you bought them. Replacement-cost coverage will cover the cost of replacing your belongings new, now.

l Understand YOUR POLICY’S LIMITS: Basic renters insurance policies cap reimbursements, meaning that a diamond ring could be covered for only $1,200, even if it’s worth six times as significantly. So be sure to buy the extra coverage you need for pricey items like jewelry, electronics and musical instruments. Some men and women even carry riders against identity theft. But additional coverage adds up swiftly so be clear about your priorities

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