Everything you need to know about insurance basics, like coverage types, limits, cost and more.
Your coverage limits are one of the main factors that determine how much your renters insurance costs. A renters insurance policy is built with standard coverage limits, which are maximum amounts your policy helps pay in case you have a claim. Your personal property and liability coverage both offer protection up to two different dollar amounts.
If you have more valuable items to protect, like jewelry or expensive electronics, you can extend your coverage limit with itemized personal property coverage. This not only gives you a higher coverage limit, but those items will be covered for more types of events. When extending coverage limits, the cost of your renters insurance premium will be impacted.
Where you live may also influence the cost of your renters insurance. While the cost of insurance varies from one location to another for a variety of reasons, it’s especially relevant if you live in an area that’s prone to natural disasters, like flooding or earthquakes. A standard renters policy doesn’t cover things like floods or earthquakes and you’ll need to add separate coverage for those types of events. This results in a higher price tag for your insurance — which is still a small price to pay compared to potential repair or replacement costs.
Replacement cost value (RCV) and actual cash value (ACV) are two important types of coverage to understand. RCV costs slightly more than ACV — which pays you what your property is worth today. But if your property is damaged from an unexpected event, having RCV coverage means we’ll replace your property with new property of the same type, kind and quality and you won’t have to worry about paying more than your deductible to fully cover the damaged item. Here’s a closer look at how replacement cost value coverage protects you.
A deductible is the amount you’ll pay before your insurance company helps cover the cost for damages after you file a claim. How does your deductible affect the cost of your renters insurance? A good rule of thumb is the higher you set your deductible, the lower your premium will be. On the other hand, the lower your deductible, the higher your premium will be.