Why renters insurance is a bargain

Recently, I read an interview with a local man who had been displaced by an apartment fire. He wasn't sure where he would go once the temporary Red Cross housing ran out or how he would replace his belongings.

If he'd had renters insurance, he would have known exactly where to go: to a hotel paid for by the policy. He'd also have been able to shop for clothes, furniture and other items lost in the blaze.

Unless you own the place where you live, you need renters insurance. This kind of coverage is essential for anyone renting a home, apartment, dorm room or space in a senior living complex.

Policies cost as little as $150 a year. If you think you can't afford it, consider this: How would you afford to replace some or all of your belongings due to fire, flood or theft?

Picture yourself shut out of your apartment. The landlord will give you your deposit back, but that takes time. How's your bank balance looking -- got enough for first and last month's security? Oh, and what will you wear to work now that your clothes are all gone?

Covering your assets
When the agent asks about your belongings, pay attention -- these folks are skilled at helping us realize just how much we do have. A few examples of things that are expensive to replace: hobby or crafts supplies, business attire, makeup, tools, high-end toiletries, wine, sporting goods, holiday decorations and specialized clothes such as work boots or insulated coveralls.

Since limitations exist on certain items, such as jewelry, ask the agent about buying additional coverage. He or she should also: 

• Explain the difference between replacement value and actual cash value of your belongings.
• Make sure the "loss of use" section of the policy is adequate if you live in an expensive area.
• Encourage you to document your belongings with a checklist or, ideally, with video or photos -- to be stored elsewhere, obviously. (The Insurance Information Institute has free inventory software and free storage at a site called KnowYourStuff.org.)

Renters insurance may also cover off-premises troubles: luggage lost by an airline, say, or the X-rays for the guy you hit with a wild pitch in a pickup softball game. Any time you suffer a loss, no matter how odd, you should call your agent to see if it's covered.

Even if money is tight, remember: You cannot afford to be without this coverage. Ask about senior, military or good-student discounts; if you have auto insurance, see if there's a discount for established customers. It may be possible to pay by the month, although that will likely cost you a little more.

Find that money somehow, lest you find yourself couch-surfing or, worse, in a shelter once your friends run out of patience.

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