One of the perks of renting rather than owning is that if your toilet leaks or your windows break, it is the responsibility of the landlord to make the repairs. Unfortunately, if there is a disaster or if you're robbed and some or all your personal belongings are destroyed or taken, you will have to come up with the cash to replace these items. For these reasons, it is critical to purchase renters insurance. If this is your first experience shopping around for renters insurance, here are a few tips to keep in mind:

Understand What Renters Insurance Covers

Although there are different types of renters insurance and a variety of providers, a typical policy will cover the cost to replace your stuff in a variety of situations, including:

• Vandalism
• Fire or lightning strike
• Theft
• Damage caused by the weight of snow or ice
• Smoke damage
• Hail or windstorm

Believe it or not, the standard renter's insurance policy will also cover damage caused by an aircraft, volcanic eruption, an explosion or a riot. In addition to the typical policy, consider also adding liability insurance and living expenses coverage. The liability insurance will cover any injuries that occur in your apartment, such as a friend slipping or falling.

Living expenses coverage helps pay the bills, including food and rent at a different apartment, while your old apartment is repaired.

Actual Cash Value vs Replacement Value

You've found several potential insurance providers and you're looking through the various policies. Chances are, you will come across two terms: actual cash value and replacement value. It is critical to understand the difference between these two terms because they both represent very different types of compensation.

When you choose the replacement cost option, you will get enough money to cover the replacement of your merchandise. For example, if your television is stolen, you will receive enough money to purchase an equivalent television.

Conversely, if you choose actual cash value coverage, you will get back the money of any stolen or damaged items that their current value – including depreciation. The difference between the two coverages is vast, so don't hesitate to contact an insurance provider to discuss your options.

Living in an apartment can provide you with a lot of financial freedom. However, if you don't pay a little extra each month on renters insurance and there is a disaster, you could wind up with an inexpensive, but unfortunately empty, apartment.