The basics of renters insurance

Footing the bill when your home is unlivable

If your apartment or condominium becomes uninhabitable due to a fire, burst pipes, or any other reason covered by your policy, your insurance will cover your "additional living expenses." Generally, that means paying for you to live somewhere else.

This coverage has a limit of about 30% to 50% of the total value of the policy. So, if you're insured for $100,000, your "additional living expenses" limit will be $30,000 to $50,000, depending on your policy terms.

Your insurance company will continue to pay while your home is being repaired or rebuilt, or until you permanently relocate. Sometimes 12 months is the longest an insurance company will continue paying. With some policies, you're limited to what the insurance company considers a "reasonable length of time."

Liability protection is also standard with most renters and condo policies. This means if someone in your unit slips and falls, you're covered for any costs, up to your liability limit. If this person sues you, you're covered for what they win in a court judgment as well as your legal expenses, up to your policy's limit.

Keeping your premium low

Just like any other type of homeowners insurance policy, your premium depends on a number of factors: where you live, your deductible, your insurance company and whether you need any additional coverage.

There are ways to reduce your renters or condo owners insurance bill.

Increasing your deductible (the amount you pay before your coverage kicks in) is one strategy. Make sure you can afford whatever deductible you choose.

If you're thinking about getting a dog, you might want to think twice. Some insurance companies are reluctant to write policies for owners of certain breeds. (See "Your dog's bite could bankrupt you.")

Most insurers offer a discount for "protective devices," including smoke and fire detectors, burglar alarms and fire extinguishers.

Some insurers may also offer discounts to policyholders who are over age 55 and retired. Others might offer a discount if you buy both an auto and renters policy (called a multiline discount).

As always, keep your paperwork up to date and contact your agent if you have any questions about your coverage.

Updated July 14, 2009

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