Does a renters insurance policy cover theft?

Renters insurance is basically a stripped-down version of a homeowner's insurance policy. It has been stripped of the coverages for the dwelling and other structures, but includes all of the other coverages in a home insurance package. This includes liability insurance, loss of use insurance, and personal property insurance. But just because theft is covered by a renter's policy, you should still take a close look at your policy to make sure that is actually doing what you need it to do.

The personal property coverage in a renter's insurance policy is usually limited to a percentage of the total policy value. At a glance, this sounds like a good deal, but the truth is that most families own more personal property than the policy will cover. After all, your personal property includes everything you own in the home and on the insured property, from your children's toys to your wardrobe. It is not unusual for the average family to own many thousands of dollars in personal property.

If your renters insurance is not sufficient to cover all of your personal property, you have two options. You can either purchase a rider to expend the personal property coverage, or buy a separate personal property policy. If you own expensive items, it may be better to insure those items separately to get the best coverage. And even with a policy that meets your needs, there is another consideration that could affect whether a theft is fully covered.

Check your renter's insurance policy to find out whether it pays Actual Cash Value, of Full Replacement Value. The difference is that the actual cash value of your property depreciates over time, resulting in a claim settlement below the actual cost to replace the stolen item. Replacement Cost insurance will cost a little more in premiums, but it is worth the investment.