Deciding on how much renters insurance you need depends largely on the value of your belongings. Of the four coverages in a standard renters policy, your personal property coverage requires the most attention. The others, including renters liability, typically come in preset amounts that you may need to increase. Read on for tips on figuring out how much renters insurance you need.

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How much renters personal property insurance do I need?

The amount of personal property coverage you buy in your renters insurance policy needs to match the combined value of your belongings, including your furniture, clothes, recreational gear and other stuff.

Since no two people have the exact same possessions, it’s tough to find a one-size-fits-all solution. Your neighbor may have $50,000 worth of stuff, but the value of your belongings may only add up to $30,000, even though your apartments are the same size.

The best way to figure out how much personal property coverage you need is to create a list of your belongings and the estimated value of each item or set. Then just add up their total value.

Though this may seem cumbersome, taking the time to accurately estimate the value of your belongings can help you buy enough coverage without overpaying for coverage you don't need.

You can also turn this list into a more detailed personal property inventory by filling in additional details about each item, including model and serial numbers, and purchase dates, locations and prices.

If you ever have to file a claim, an updated property inventory with photos of your belongings can expedite your payment from the insurance company.

Is that it?

Choosing your personal property coverage limit is usually the first of about seven important decisions that determine how much renters insurance you get. Fortunately, the remainder of your choices usually require far less time than it takes to estimate the value of your belongings.

Typical renters insurance coverages and choices*
Coverage What it does Your choices
Personal property Reimburses you for belongings damaged or destroyed by a covered peril, or stolen. Common limits range from $10,000 to $150,000.
Additional living expenses (ALE), also known as loss of use Covers the portion of temporary living expenses that exceed your normal costs when a covered peril leaves your home uninhabitable. Often offered as a percentage of your personal property limit.  Accept the default limit or choose a higher limit.
Personal liability Pays others for damage or injuries you cause. Often offered with a $100,000 limit. Accept the default limit or choose a higher limit.
Guest medical payments Covers medical bills for those injured while visiting your home. Often offered with a $1,000 limit. Accept the default limit or choose a higher limit.
*Does not include other optional coverages and endorsements, which vary by company.

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Here are key things to know about the remainder of your renters insurance choices.

Your personal property deductible

Your deductible is the amount of money that comes out of your own pocket before insurance funds kick in on a personal property claim. A higher deductible gives you a lower rate, but a lower deductible reduces your potential out-of-pocket costs.

Special coverage for jewelry and other valuables

Renters’ policies often cap the coverage for theft of jewelry at $1,500, sometimes less, and contain similar limits for certain other valuables. You can bump up the coverage for specific items by adding a scheduled personal property floater or rider to your policy.

Replacement cost or actual cash value

Standard renters insurance covers your personal items at their actual cash value, but you can often upgrade to replacement cost coverage. With actual cash value coverage, the insurance company reimburses you for the depreciated value of any stolen or destroyed items. With replacement cost coverage, the insurance company pays for new stuff.

How much renters liability insurance do I need?

Standard renters insurance policies often come with a $100,000 personal liability limit, but there are times when it makes sense to buy more coverage.

For example, if you have a high net worth and/or earn a high salary, a higher liability limit provides more protection for your assets. Or, depending on where you live, your landlord may require a higher limit.

The good news is that increasing your liability limit normally does not add too much to the cost of renters insurance. Considering the litigious nature of our society, increasing your renters liability limit to at least $300,000 can be an inexpensive way to protect yourself from the unexpected.

If you have a dog, you should make sure your renters insurance liability coverage does not exclude dog bites. If it does, you may need to buy a separate dog-bite liability policy.

How much renters insurance do I need for ALE, medical payments and other coverages?

The default limits for additional living expenses (ALE) and guest medical payments normally included with renters insurance are usually enough for most people, but make sure your quote or policy includes these coverages in the appropriate amounts.

Additional living expenses

ALE is often offered as a percentage of your personal property coverage, anywhere from 10% to 40%, depending on the insurance company. If your insurance company’s ALE limit defaults to 20% of your personal property coverage and you choose a $50,000 personal property limit, you automatically get $10,000 in ALE coverage.

It’s tough to predict how much money you may need for temporary housing. However, if your rent is below the average rate for your community, you may want to buy more ALE coverage, particularly if you can get it at a reasonable rate.

Guest medical payments

A common renters insurance limit for guest medical payments is $1,000, and this is also usually enough for most people. If you feel more comfortable with a higher limit, or your landlord requires one, you can usually increase it to $5,000. Buying a higher medical payments limit usually only results in a small premium increase.

Other coverages to consider

It’s important to note that renters insurance typically excludes earthquakes, floods and sinkholes. In certain parts of the country, extreme wind and hail may also be excluded. However, separate coverage for these and other excluded perils is often available by endorsement and/or through standalone policies, depending on your insurance company and where you live.

Standard renters insurance typically excludes coverage for business activities. If you operate a business in a rented home, you should see if your insurance company offers endorsements that extend your policy’s coverages to your business activities. If none are available, you may need to buy a separate commercial insurance policy.

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