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HouseAccording to a 2012 survey published by the Insurance Information Institute, only 31 percent of renters purchase a renters' insurance policy. These numbers are surprising when you consider that, in many large cities such as New York, Los Angeles and Chicago, renters significantly outnumber homeowners.

One reason for these low numbers may be that some renters think that everything in their rental unit, including personal belongings, is covered by their landlord’s insurance. In fact, a landlord’s insurance only covers the building, not tenants' personal possessions.

Renters' Versus Homeowners' Insurance: What’s the Difference?

The basic difference between renters' and homeowners' insurance is that homeowners insurance covers structural damage to the building as well as property loss, while Georgia renters insurance only covers personal property loss.

A standard renters' insurance policy will cover the replacement value of your personal belongings if they’re damaged or lost due to natural disasters, fire, vandalism or theft. A standard policy also provides liability coverage (typically around $100,000, but you can purchase more) if someone is injured in your rental unit.  Also, your policy will cover additional living expenses if you have to move to temporary accommodations while your rental unit is being repaired.

As with homeowners' insurance, however, some events, such as floods, are not covered in a standard renters' policy. If this concerns you, then ask your agent about additional coverage.

Replacement Coverage

Insurance companies use two terms that you should remember: Actual Value Coverage (AVC) and Replacement Value Coverage (RVC). The difference in these two coverages can be worth thousands of dollars.

If your policy offers Replacement Value Coverage, then you’ll be reimbursed for approximately the full replacement value of the items you've lost. Typically, Replacement Value Coverage may cost 25 percent more, but you’ll probably find that it’s worth it.

Actual Value Coverage covers the depreciated value of the item in its used condition. This means that you may get only $200 for the loss of your laptop, even though you paid $600 for it three years ago.

If have expensive items such as jewelry or musical equipment, you may need to purchase a floater, which will add extra coverage to your standard policy.

Roommates and Renters' Insurance

If your roommate already has renters' insurance, it’s still a good idea to get your own policy to ensure that there’s enough coverage for all of your possessions. Likewise, you should have your own liability insurance, because if your roommate is accidentally injured, and you’re held liable but don’t have an individual policy, you could be hit with an expensive hospital bill.

If you’re currently renting, you’ll want to make sure that your personal belongings are protected against theft, vandalism and natural disasters. For more information about renters' insurance, please call Peachstate Insurance at 1-877-997-2478, and we’ll be happy to answer all your questions.

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