Tom Kelly: Renters need insurance reminders, coverage

There’s no doubt that the average person significantly undervalues his or her belongings.

People are simply worth more than they think they are. Go to your closet. There’s probably very little hanging in there that’s worth less than $30. When you consider a few business suits, a heavy winter coat or two, wool sweaters from the folks – you can easily be averaging more than $50 a hanger even when you include that stack of ancient athletic sweatshirts.

According to the Insurance Information Institute, a national trade association financed by insurance companies, renters don’t have the constant reminders that are aimed at homeowners. For example, when you buy a home, you have the mortgage people reminding you that you need insurance in order to get a loan. Those reminders simply are not present for renters.

About one-third of all losses or damage to dwellings and contents are for less than $500. These losses frequently are as costly to process as large losses. In order to keep the costs as low as possible for larger setbacks, companies offer a deductible clause. This means the policyholder is responsible for all losses up to that amount. Generally, the larger the deductible, the less expensive the premium.

Annual renter’s insurance runs about $250 a year for up to $20,000 in replacement cost for possessions and includes $100,000 in liability protection. Less expensive standard policies are available, but the depreciation factor can eat away the value of most items. Take the time to do the research and insure your possessions.