How Much Renters Insurance Do I Need for My Belongings?

When looking for renters insurance, you will want to carefully consider how much coverage you need. Part of renters insurance covers personal belongings, which provides compensation if your personal items are lost or damaged due to fire, lightning, smoke, theft, vandalism and more. 

How much insurance you need to protect your belongings depends, however. Your insurance limits will depend on the amount of items you have and their value. 

There are two types of renters insurance policies when it comes to compensation for your personal belongings: actual cash value and replacement cost value. 

Actual Cash Value vs Replacement Cost Value 

An actual cash value policy provides compensation for your lost or damaged items after accounting for depreciation. Depreciation is when the value of your items goes down, so as the value of your items drops over time, so does the amount of compensation you can receive. For example, if you purchase a TV for $1,000 and a few years later it is only worth $500, you will receive closer to $500 for compensation if the TV is damaged or destroyed instead of what you originally paid. 

A replacement cost value policy provides compensation for your items without depreciation. This insurance will help you replace your items no matter how the value depreciates. A policy with replacement cost value is generally more expensive, but you will also be more likely to replace your items completely after a disaster. 

How to Calculate the Replacement Value of Your Belongings 

If you have receipts for your items, you can calculate how much your current belongings are worth, thus telling you how much insurance you should purchase. You will likely want to insure your belongings for their total value. If you do not have receipts, you can check the current market value of your belongings to help to estimate how much they are worth. 

Keep in mind that some items have limited coverage under renters insurance. Expensive items like jewelry, furs, art and electronics may need additional policy floaters to be covered fully. 

If you purchase any new expensive items, make sure to check that your renters insurance policy will be adjusted to reflect your new belongings. 

Your deductible may also change. Deductibles for renters insurance personal belongings are generally either $500 or $1,000, though other variables are also available. A higher deductible can mean lower monthly premiums, but it also means paying more when you have to file a renters insurance claim.