Renter’s insurance covers the renter’s possessions in case of fire or theft. Renter’s insurance does not cover damage to the specific house, because the landlord should have separate insurance that covers the property. Renter’s insurance also does not pay the money necessary to replace windows, walls or floors damaged by the renter. Renters insurance is relatively cheap, and several companies offer it. If you are thinking about getting renters insurance, buy a fire proof safe and take a detailed inventory of the items in your home, how much you paid for them, and how old they are. Next, save receipts for all items you buy after taking the inventory. Keep receipts and inventory lists in the fire proof safe, along with any cash or valuable jewelry inside the home.

Next, consider these factors when looking for a great renter’s insurance provider:

Full coverage: this means the insurance covers everything in your home, and accounts for sentimental value. In the case of a fire, you can lose everything.  You want to make sure that the insurance will help you get your life back on track.

Deductible: The higher the deductible, the lower the overall cost of coverage. Make sure that the insurance is still going to provide you adequate financial support. Don’t take a one thousand dollar deductible on two thousand dollars worth of stuff.

ACV (actual cash value): This is the actual value of all the items in your home after considering the total price you paid minus any depreciation. That is why it is a great idea to write down how much you paid and when for each item in your house. Some insurance will cover only actual cash value.

Replacement costs: This is different from actual cash value. Instead of paying actual cash value, some insurance will pay you the estimated cost of replacing the item. Know what kind of coverage you have. Depending on the item, either ACV or replacement cost can be a better deal.

Other than just considering the items in your home, your renter’s insurance rates will depend on whether you have a security system, dead bolts and fire alarms in your home. Some renter’s insurance will not cover a home with a certain breed of dog in it.  Floods, earthquakes and other natural disasters are often not covered by renter’s insurance.

Deciding if you need renters insurance will require a working knowledge of the items in your home and what they are worth. Consider this against the overall monthly premiums and the coverage being offered. Often, it is a great idea to, instead of paying insurance, save money yourself in case of an accident. Having an emergency fund is a great option because any type of emergency can be covered, and, in case of a natural disaster, you haven’t thrown your money away. Take a good look at your options before you decide, in some cases, based on the overall value of your possessions, renters insurance will be the better deal.