Getting and Comparing Bids for Renter’s Insurance

If you’ve made the choice to procure renter’s insurance, now is the time to do some shopping and get some bids. This will allow you to see the different prices out there from all the insurance carriers, which will better ensure that you're getting the best deal. A little education and hard work will come in handy here to also make sure that you're getting the right type and amount of coverage for your particular situation.

Remember, an "apples to apples" comparisons is the only way you can obtain comparable bids to review. You do this by understanding the categories of coverage so that you tell the insurance agent — or your broker who is preparing a bid — to give you X or Y dollars of coverage. This is because if you don’t provide information on what coverage you would like, different agents might quote different coverage amounts.

For example, one agent might quote a premium of $125 per year based on his estimate of $15,000 of personal property coverage. But another might quote $185 based on her estimate of $30,000 of personal property coverage. This means that if you just took the lower priced $125 premium insurance, even though you have $30,000 worth of personal property, and then a fire destroyed all your personal property, you’d only be reimbursed based on your coverage amount of $15,000. So making sure you get the best price for the correct coverage is essential.

When meeting with your agent, have them show you the coverage page with the categories of coverage and maximum coverage limits. The most important ones are for personal property and liability coverage.

Personal property coverage includes your items if there is a fire or flood that damages them, or if your property is burglarized. You need to add up all the value of your electronics, clothing, furniture, bicycles, TVs, computers, etc. and come up with a total value for the goods that you want insured. Discuss this with your agent. Determine the value of your personal property to make sure you remember everything to note. If you are young with just an apartment full of Ikea items, you might only need $20,000 of coverage. But if you are wealthier, you could easily have $150,000 worth of personal property. Once you have a list of your possessions, you can estimate the total and the agent can prepare a premium price for you.

Liability coverage takes care of the other really important part to consider. If you have a dog that might bite someone, or have guests over frequently who might slip and fall, or have an in-unit washing machine where the water intake rubber hose could break, these are all items that could cause you liability. Also, it will cover you if your unit caught on fire and caused damage to other units, whether fire or even just smoke damage. Any of these could cause someone to look towards you for reimbursement for their losses, or sue you if needed. For this reason, a policy might have anywhere from $50,000 liability coverage to $300,000 liability coverage. If you have a good job and make a good living, or have significant wealth, you should consider increasing your liability coverage. You can get additional coverage, maybe called an umbrella policy, that gives you $1,000,000 of liability coverage for an extra $300 to $400 per year. That’s well worth it if you are well to do.

You also need to set your deductible amount at the right level. If you have a loss, you typically pay the first X dollars of your loss, and the insurance company covers the rest. That first X dollars is called your deductible. It can be $100, $200, $500, maybe even $2,500. Keep in mind that typically, the lower the deductible, the higher the insurance premium, so ask your agent how changing deductibles will change your premium price.

Lastly, discuss with your agent whether their policy covers Actual Cash Value (ACV), which is the depreciated value of the property, or the replacement value, which is what it would cost to buy the new personal property today. If you can choose, remember that which one you select will impact your annual premium cost and your coverage. More information is at About.com .

Call a few agents, submit an application online, get some bids back, look over the coverage to ensure it is the same coverage in each bid, and select the carrier that you feel comfortable will be there in case you have a loss and need to make a claim!