Most renters have the mistaken belief that they don’t need renters’ insurance and that the property owner is responsible for any damages to the property. The owner’s coverage doesn’t protect you against damage that you or your guests cause to the property. If you overrun your bathtub and water leaks into the apartment below, you’re liable for the costs, unless you have renters’ insurance.
The building owner’s coverage also doesn’t protect you against personal injury lawsuits if someone is injured in your apartment. And it doesn’t provide for replacement of your belongings if they’re stolen or damaged by fire or water. Renters’ insurance does all of this and is well worth the cost—which is surprisingly low.
Even if you don’t have much furniture or large household appliances, you’d be amazed at how much your belongings would cost to replace. For starters, you probably have several thousand dollars’ worth of clothing. Take a detailed room-by-room inventory of your belongings, write down a brief description of each item, and estimate what it would cost to replace it. Include clothes in your inventory.
When buying insurance, it’s a good idea to buy coverage for replacement cost rather than actual cash value. Replacement cost coverage is just what it sounds like: If something you own is stolen or damaged by fire or water, the insurance company will pay you what it will cost to replace it with an item of similar quality. Actual cost value coverage assumes that your belongings lose value with time and usage, and pays you only the depreciated value of the items.
The deductible is the amount you agree to pay out of pocket before the insurance company covers the rest of your loss. The higher the deductible, the less expensive the insurance. When choosing a deductible, you’re deciding how much risk you’re willing to take and balancing risk and cost. Most property deductibles are between $500 and $1,000 per year.
Excise tax on automobiles is one of the biggest surprises people face when they register their car in a new city. This tax is based on the value of the vehicle and can amount to many hundreds of dollars on newer or more expensive models. When you’re planning your move, check online for the cost of registering your vehicle and whether excise taxes are charged. You’ll be able to see how much you can expect to pay on your particular make, model, and year. One comfort is in knowing that the tax will decrease each year as the car depreciates.
Auto insurance costs can vary dramatically from one city to the next. Obviously you’d expect rates to be higher in large cities, but the size of the city is not the only thing that determines rates. If you’re thinking of moving to a new city, check online and get a quote on coverage for the make and model of your vehicle.