As a renter, you may not have the obligation to insure the structure where you live, but your possessions are at risk if a catastrophe should strike. Your landlord carries a policy that protects the building, but when it comes to your possessions, you're on your own. Fire, lightening, theft, and other disasters can leave you without your furniture, electronics, clothing, and other personal belongings.

Renter's insurance also provides liability coverage in case someone is hurt while in your home. Liability coverage will also protect you from damage to the landlord's property that you may cause. A renter's policy will provide living expenses if you are forced to leave your home for a period of time due to structural damage or problems that make your building uninhabitable.

Before you or an insurance expert can determine how much insurance you should have, consider creating an inventory of your personal property. Ideally, you should photograph or videotape your possessions and record details about each item. This documentation will save you heartache and worry if a catastrophe should occur. Do you suppose you'd remember each and every detail after the disaster? Probably not.

If you should face the unfortunate reality of a burglary or fire, your insurance carrier will want some verification of your lost property in order to provide coverage. Your detailed inventory will be crucial to your ability to accurately prove your losses.

Your inventory should include as much detail as possible. Attempt to document the following information for each item:

• Description (photograph or video including any special markings)
• Purchase price and date
• Copies of bills or receipts, if possible
• Serial numbers
• Professional appraisals, if applicable

Include in your inventory the contents of each room, including every detail. Provide colors, dimensions, manufacturers, and materials, if you can. If you imagine yourself taking an inventory of one room in your home, are you including the contents of every drawer and closet? To get the complete picture for your inventory, imagine you are packing to move. Every item that you wrap and put into a box needs to be listed on your inventory. If it seems too overwhelming to list each and every sweater, list the sweaters in groups by type of fabric. When you find that special cashmere sweater, itemize that single sweater by itself. Don't forget any extra storage areas you may have in the building. Those types of areas are full of stuff for your inventory.

Remember to update your inventory as you purchase or part with possessions, and give careful consideration to where you keep your inventory. The ideal storage place for the inventory is at the bank in a safe deposit box. If your possessions are destroyed and you've kept the inventory at home, it will be gone, too.

When your insurance company calculates your losses, they use two common ways to determine the value: Actual Value and Replacement Value. It is individual state laws that determine whether your insurance company uses actual or replacement value to process claims.

• Actual Value - Actual value is the replacement cost of an item minus depreciation. As an illustration, let's say a fire damages your five-year-old stereo. Your carrier may determine that the stereo has depreciated 50% during the five years since you bought it. Today, a comparable new stereo costs $200. The insurance company would pay you 50% of $200, which equates to $100 for your damaged stereo.
• Replacement Value - Replacement value is the cost to replace the item with no deduction for depreciation. Let's consider an example of a camera lost by theft. Even though the camera was purchased five years ago for $500, due to advances in technology and a decrease in the price of the camera, the exact same camera can be purchased today for $300. Replacement value then is the cost of a comparable unit - feature for feature - purchased today. Find out whether your insurance company will pay you actual or replacement value for your possessions at the time of a claim. If your state calculates losses based on actual value and you would prefer replacement value, you can upgrade your policy to provide this level of coverage. Yes, your premium will increase for this coverage if you add it to your policy.
• Policy Limitations - Your renter's insurance is intended to cover general possessions. Due to the variability among the general public and the value of their possessions, the insurance industry has established limits of typically $1,000 for stolen jewelry, and $3,000 to $10,000 for a computer. Check with your insurance company to verify the limits that apply to your coverage. You can see that it is important to keep a complete inventory of your personal belongings to be sure your coverage is adequate. Additional coverage can be purchased for any valuable collections, jewelry, antiques, artwork, and other such unique items, as needed. To learn more about what your inventory should contain, read our related article listed in the Library section.

You may want to begin shopping for renter's insurance with a checklist so you can compare the discounts offered by different insurance carriers. Among insurers, you may see a significant difference in the quoted premiums. Without a checklist or worksheet, it will be more difficult to keep track of the savings being offered by the insurance companies. If you are already working with an insurance company, ask your agent to discuss any discounts that may be available to you.

• Nine Ways to Save - If you are a prepared shopper when you start pricing insurance, you are likely to get the coverage that is best for your unique circumstances. As with any other important purchase for yourself or your family, doing your homework will result in greater satisfaction for you and, in the case of insurance, better coverage. Within each of the nine categories below, suggestions are offered that may help you save on your homeowner's insurance:
  • Shop Around - In addition to the insurance company that served you in the past, if you are in the market for insurance, ask friends and family about their insurance. The Internet is another source to collect considerable information about insurance without having to spend time on the telephone until you are ready. Build a checklist and compare the coverage from company to company. Remember, you are looking for both a reasonable price and great service. Keep in mind the old adage, "you get what you pay for."
  • Raise Your Deductible - Each time you make a claim against your policy, you assume a portion of the expense toward replacing your loss. With each claim, an agreed-upon amount of money, or a deductible, will be deducted from the amount paid to you in your recovery. Typically, the higher the deductible you are willing to assume with each claim, the lower the premium cost. Deductibles usually start at $250 and go up from there, depending on your policy, the insurer, and your own circumstances.
  • Buy Your Renter's and Automobile Insurance from the Same Company - Frequently, if you buy both policies from the same insurer, they will reduce your premium by a small percentage.
  • Improve Your Home Security and Safety - Every safety device you install in your home increases the potential savings you may receive. Make sure your apartment has smoke detectors and deadbolts on every external door. Additional security devices, such as burglar alarms and sprinkler systems, will also be beneficial toward receiving discounts from insurers.
  • Stop Smoking - We are all aware of the dangers associated with smoking. Have you ever thought about that, in addition to the health risks associated with smoking, if we live with smokers we are at risk for residential fires? Some insurers will offer discounts to households where there are no smokers.
  • Seek Out Discounts for Seniors - Some companies offer up to 10% discounts to households where senior citizens reside. Potentially, retirees over 55 years of age have more time to care for their residences. For those people that are home during the day, there's an increased likelihood that, if some problem should occur, they would be present in the home to act on the disaster by calling the fire department or other local authorities.
  • See If You Can Get Group Coverage - You are probably familiar with the expression that there is power in numbers. That's true of the purchase power of a large group. If you belong to an association related to a college or university alumni, a business group, or a community organization, find out if that group has already formed a relationship with an insurance carrier that will offer discounts to the members.
  • Stay With An Insurer - The duration of your relationship with your insurance carrier may also make discounts possible. You can certainly keep your insurance up-to-date on a yearly basis and still maintain coverage with the same insurer for many years. Ask your insurance agent about discounts that apply to maintaining your coverage for multiple years with the same firm. As early as three years into your relationship, you may be able to take advantage of a small discount.
  • Compare The Limits In Your Policy To The Value Of Your Possessions At Least Once A Year - It's a good idea to give your insurance policy and your inventory an annual check-up to review the things that may have changed over the course of the year. Over time, the value of different objects may increase or decrease, and those changes should be represented on your inventory and checked against your coverage. When the time comes that you have to make a claim against your policy, having all of the details up-to-date is likely to ease the claim process.

Since everyone's circumstances differ, there is no single formula for insurance. Before you talk to an agent, make a list of the reasons you think you should receive a discount based on the suggestions provided above. Ask your agent to tell you about other discounts, too.

Renter's insurance is one of those topics that make us think about the unthinkable. We don't plan these catastrophic events; they just happen. At that point in time, it's too late to start making plans or wondering about your coverage. An important step for any renter is learning about the insurance that will bring them peace of mind.