In many situations, renters insurance is quite cost effective. For the amount of protection it offers, this type of plan is not one to overlook either. However, not all plans are the same. It is very common for renters to misunderstand the need that this policy can offer. Before you buy coverage, consider the various types of policies available, what they cover and how much they cost.

What Goes Into What You're Charged?

Renters insurance policies can be customized to meet your needs. This means that the premium amount will differ from one policy and one property to the next. Generally, there are three main things that impact the amount you pay for renters insurance.

The type of coverage: Coverage options range widely. They can include personal property coverage (from risks such as theft, fires and smoke), loss of use and inflation coverage. Personal liability coverage is also a key component because it protects you from costs related to accidents other people have while visiting your apartment. You may also want to consider medical payments for others. The more coverage options you select and the higher your policy limits, the higher the premium is likely to be.

The amount of coverage: In most cases, renters insurance coverage is minimal. It should be enough to cover the cost to replace or the value of your belongings. Liability insurance should be higher because medical bills from accidents can be expensive. Work with your insurance agent to create a policy that meets your coverage needs based on property and asset value.

The deductible: The deductible is the portion of a claim that you pay out of pocket. You will need to pay the deductible level in full before the insurance company covers the claim. The higher this amount, the lower your premium will be. However, you should never set it so high that you cannot afford to pay for it out-of-pocket.

While it’s important to look for an affordable renters insurance plan, it’s just as important to have coverage that meets your specific needs. Take the time to work with your agent to customize a plan that both protects your assets and stays within your budget.