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Need help calculating the value of your possessions?

Need help calculating the value of your possessions?

Need help calculating the value of your possessions?

Calculating the replacement cost of the items you own, (personal property coverage in renters insurance terms), may not sound fun, but it is important.

One common mistake that renters do when sitting down to “do the math” is underestimating the value of their possessions by thinking only of the most expensive and largest items they own, such as furniture or electronics. A true count—which should even include the food in the fridge—you may be in for a surprise: possessions add up quickly. In fact, the average renter tends to have more than $30,000 worth of belongings.

College students are one renter group who may not believe their belongings justify the purchase of insurance. But start adding up the cost of a few basic items, such as phone, laptop, TV, bike, camera or sports equipment, and they will quickly realize their stuff has value.

Here is some advice which can prove helpful in determining how much coverage you need based on the value of your possessions:

  • First of all, go through each room and photograph or create a video of your belongings. This provides proof of existence and condition.
  • Some prefer to record their belongings according to item type, but in case of natural disasters or partial property damage, knowing the contents of each room might make filing a claim easier.
  • Include pictures of receipts and/or research online for the replacement costs as most policies offer “new-for-old” coverage.
  • Don’t leave out “smaller” items such as rugs, books, shoes, clothes or even bed linens. They may seem less valuable, but their costs add up.
  • Check whether your policy offers you “fair market value” or the “replacement value” of your lost or damaged items. Fair market value means that you will receive the value of the item at the moment of filing a claim while replacement value means you will receive the cost of a new, similar item.
  • Finally, the general advice is to round up the calculated value of your items to the nearest $10K in order to determine how much coverage you need for your personal property; however, it’s better to be accurate than pay unrealistic monthly premiums.

Knowing how much your personal property is worth can help you choose the plan that best fits your needs. Oh, and just a final heads up that more valuable things such as jewelry or art need extra coverage.