Every landlord has homeowner’s insurance. Should every renter? Renter’s insurance is much more affordable than homeowner’s insurance, and it’s guaranteed to protect your belongings.

It only costs about $100 to $250 per year and can be negotiated down if you’re a teacher, nurse, or military professional. Rates are also more flexible if you have a good credit score or are bundling with other insurance plans, and a policy could mean the difference between surviving and collapsing in a crisis.

What is Renter’s Insurance?

Unlike landlord’s insurance, which only covers damages done to their property, renter’s insurance can cover your personal belongings in the case of theft or natural disaster. Insurance companies will offer a set rate they’ll provide if your possessions are damaged or stolen, but you can also purchase additional coverage if you believe the potential payout to be too low.

For example, if a company offers you $2,500 in jewelry coverage, but you have a piece that costs $4,000 alone, you can purchase additional coverage to make sure you are completely covered.

Renter’s insurance will also cover you in the situation that someone comes into your home and is injured. Depending on the injury, a person may name you responsible for their medical bills and even sue you to seek coverage. Here renter’s insurance can relieve you of liability and ensure that the guest finds the money to pay for their treatment.

Additionally, it can cover you in the case of another tenant’s mistake that damages your property. For example, if a neighboring unit starts a kitchen fire that damages your living space or belongings, your items and home will be covered. If you need to leave while the repairs are made, your insurance can even put you up and pay for your hotel bills.

What Are The Benefits of Renter’s Insurance?

Besides being covered in the case of a natural disaster, renter’s insurance can cover a variety of unexpected issues.

Depending on your coverage, some policies can replace items stolen from your car while it’s parked outside your home or extend limited coverage over items you have packed into a storage unit. With such a vast range of policies, it’s important to do your research and shop around before making a decision.

It can be especially important to purchase renter’s insurance if you’re working from home. Whether you work from a single room in your apartment or are an employee asked to work in both an office and complete assignments at home, a portion of your renter’s insurance could be tax deductible.

How to Budget For Renter’s Insurance

The national average for renter’s insurance is $15 to $30 a month. The rate you receive will depend on where you live. (Areas with high crime or flood prone land will increase the amount you’re asked to pay.)

Even so, any rate can be negotiated if you have a good credit score or a low previous claims history. Over time, if you set up auto-pay and go an extended period without filing a claim, many insurers will be open to lowering your rate. In addition, several companies offer professional discounts for teachers, first responders, and military personnel and may even offer you a discounted rate for safety equipment like deadbolts or fire extinguishers.

When you choose your policy, you can set exactly how much coverage you want. A plan with higher coverage will often mean a higher monthly premium, but this will pay off when it comes time to claim in an emergency. Similarly, if you sign up for a plan with a higher deductible you’ll pay less in monthly premiums, but must be prepared to pay your deductible in full before receiving coverage.

The coverage you receive is also dependent on whether you choose a replacement cost value policy or an actual cash value policy. You can save money by choosing an actual cash value policy, but only because it will take your item’s material depreciation into account and simply offer you its current market value.

If you can spring for it, it’s better to select a replacement cost value policy which will reimburse you for the total amount you paid for the item.

How To Apply

In the U.S. it’s predicted the average person has about $20,000 in personal property. While this number seems high, adding up the costs of electronics, kitchen equipment, tools and jewelry can quickly give way to this amount. Plans ranging around just $20 a month usually offer about $2,500 in coverage which could be lifesaving in the case of a small emergency.

The best way to figure out how much coverage you actually need is to simply take inventory of your items and the costs it would take to replace or repair them. It’s important to take this step seriously, as rounding down on their value can lead you to under-insure yourself. Documenting your items can also be invaluable in the case of an emergency, and when it comes time to stake your claim.

When shopping for a policy, it can be helpful to talk to your neighbors to get a sense of what plans cost in your area. Recommendations from family and friends can also lead to family rates or package deals from your provider—which will offer better discounts. Once you have a few insurers you’re interested in, run their names through a company like A.M. Best who compares insurance ratings. They can tell you about a provider’s ability to pay you when you file a claim.

Finally, after looking into your options go ahead and start a few applications for renter’s insurance. There’s reason to apply to several companies because you can only find your true rate and coverage by applying. Today many providers allow you to complete the process entirely online, and even those who require paperwork to be mailed in will not need to meet in person.

Once you receive your finalized policy in the mail, you’ll want to review it to make sure you understand exactly what is covered and that any additional coverage you purchased is clearly stated. From there, you can finally kick your feet up and enjoy your newly insured couch or TV.

To start budgeting for your new policy, consider opening a checking account with ISU Credit Union who can help you meet all your responsibilities through a smart banking option without fees through our Basic Checking.