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A cautionary tale-and lessons learned
Andrea Bennett
November 11, 2005: 11:59 AM EST

Last month, I got home from work to find that a thief had brokeninto my apartment and left me with little more than a pile ofclothing. I'm a personal-finance reporter, so you might assume myrenters policy covered the loss, right? Not quite. Though I'dbeen planning on getting a policy--I'd moved in only a few daysbefore--I didn't have a shred of coverage. Now my only consolationis the following set of lessons I learned while researching andsettling on a policy.

Renters have it cheap. An informal poll of my renting friendsrevealed that almost none were insured. (In fact, the InsuranceInformation Institute says that only 29% of renters nationwideare covered.) But most of them were surprised, and ready to signup, when I told them how little a policy typically costs--$169 ayear on average, according to the National Association ofInsurance Commissioners. The reason for this is simple: Unlike ahomeowners policy, renters insurance covers only the value ofyour belongings, not the physical structure itself.

Not all rental policies are the same. An actual-cash-value policywill pay only what your things were worth when they were damagedor stolen, which usually ends up being about what you'd get forthem at a garage sale. So it generally makes sense to pay alittle extra for a replacement-cost policy, which will run 15% to20% more. For me it will mean the difference between about $170and $200 a year--in other words, not much. (Allstate has aproperty-reimbursement option, which will pay you for things youreplace and give you the cash value of things you don't.)

Some things are covered, and some are not. Most policies place alimit on reimbursements for any single item, so be sure to attacha so-called floater, or rider, for anything that exceeds the cap,like jewelry, art or a computer. And parents of college students,take note: Standard homeowners policies often cover full-timecollege students who are under 24 years old and living on campus.

The Web makes shopping easy. I started shopping on the Web atNetQuote ( by filling out an onlinequestionnaire. Within 24 hours, agents from three insurers calledme with quotes, two of which were competitive. But the lowestcame from Homesite (, which would cover $16,000worth of stuff and $300,000 in personal liability, with a $250deductible, for $162 a year.

You can lower your costs (and sometimes protect yourself in theprocess). Nearly all major insurers will discount your premium--byas much as 15%--if you install security devices like deadbolts andsmoke detectors. Most local police departments will, at nocharge, send an officer to make security recommendations. Aninspection won't lower your premium, but acting on thesuggestions often will. If you own a car, consider bundling arental policy with your auto policy, for which many companieswill give you a discount--in some cases more than you'd pay for arental policy alone. And think about putting at least some ofyour valuables in a safe-deposit box. The cost of a rider forjewelry averages $4 per $100 of value if you keep it at home, butbetween 40% to 50% less if you stash it in a safe-deposit boxwhen not wearing it.