Every residential property, wherever located, is subject to hazards. Examples of such hazards include the risk of fire, burglary or even physical injury.
In recognition of this, landlords generally insure their property against various possible risks. However, such insurance only protects them (the landlords), and not the tenant.
A residential tenant, therefore, also needs protection against loss arising from theft, fire, etc. Renter’s insurance provides such coverage. As a tenant (renter), you can expect the cost of your renter’s policy to vary, depending on certain factors. These include:
(i) Risk assessment, which refers to the level of risk that your insurance company associates with you. You are perceived by your insurer as a high-risk client, for instance, if you have regularly made claims in recent years, or if you reside in a neighbourhood that is prone to crime. In such cases, you are charged a high premium on your renters insurance.
(ii) Location, which basically has to do with the rates depending on where your residence is situated. Hence, the premium for your residential policy may be far less expensive than that for the same kind of property in another location.
(iii) Type of coverage, which may be either a ‘replacement’ coverage, or an ‘actual cash value’ coverage. The replacement policy attracts a higher premium, as it entails the replacement (by your insurer) of your lost possessions with brand new ones, in the event of disaster. An actual cash value renters policy charges a lower premium, as your insurance company will simply cover your losses based on the value of your possessions at the time of loss.
(iv) Vulnerability, whereby your rented property, for instance, has no fire extinguisher, burglary alarm or fire alarm. Such risks result in a higher premium, which becomes even more expensive with additional liability concerns such as dog ownership- depending the breed.
(v) Deductibles, which represent the amount payable by you before your insurance company makes payment on your claim. Your premium decreases when your deductible is higher, because you are taking on more of the risk through your own payment.
(vi) Coverage level, which refers to the maximum financial compensation to which you are entitled, in the event of loss. It is the amount paid out to you, in a lump sum, as coverage to enable you replace your lost belongings. The higher this figure, the higher is the premium you can expect to pay.
Against the background of the above, however, there are cost-saving techniques that can help you procure optimum coverage in renter’s insurance.
Your house’s proximity to a fire station, for example, reduces your premium. Furthermore, if you install basic protective gadgets such as smoke or fire alarm, burglary alarm, deadbolt locks, you are offered a discount by your insurer.
If you make a one-time (annual) payment on your premium, you can avoid the processing fees that normally accompany the repeated payment procedures.
You can also save cost by having multiple policies with the same insurance company. You get discounts, for instance, when the same insurer handles your house rental, car and health insurance policies.