So you thought you were saving on insurance rates, when in reality – you skimped on renters insurance and wound up underinsured.

Being stingy on insurance is a big mistake, but sadly, it’s a common one.

The worst part is that most people who learn this lesson, do so the hard way. Only coming to find out they’re not fully covered after they’ve experienced a loss.

Learn from their mistakes: Saving a buck today by skimping could cost you thousands tomorrow.

Renters:

People who rent rather than own their residence are guilty of some of the biggest mistakes of the underinsured. For the most part because they didn’t know any better.

While most people understand auto and homeowners polices are a must-have, 57% of renters don’t bother purchasing coverage to protect the contents of their home because of these mistaken assumptions:

1. “My Parents’ Homeowners Policy Covers my Stuff”

If you live on campus and at either a fraternity or sorority house then your parents’ policy may cover your things. But if you got an apartment off-campus, you’re out of luck.

2. “My Landlord’s got my Back”

The owner’s policy only covers the structure of the building. It doesn’t cover your belongings or the legal liability you will face if something is damaged or if someone is hurt inside your apartment.

3. “I Can’t Afford it and Don’t Have a lot of Things Anyway”

According to the Insurance Information Institute, the average monthly cost of a renters insurance with $25,000 worth of property coverage and $100,000 worth of liability coverage only costs $16.26/month.

If you don’t think you own enough to justify the minuscule investment – just take a look around the room and do a little math. You can’t afford NOT to get it.

4. “My Roommate’s got Renters Insurance, so I’m Covered”

Ah, good for you getting a smart roommate! Too bad you think his policy will cover your things – it won’t.

5. “My Building is Totally Burglar Proof”

Are you willing to bet your new Macbook on that? According to the US Department of justice, renters are 79% more likely to be victims of burglary than owners.

Too little, too late

There are those who didn’t get it, and there are those who just didn’t get it right.

Don’t Make the Mistakes These People Made:

6. “I Should Have Paid Attention to That List of ‘Perils’.”

Don’t assume all disasters are covered by insurance. There is a list of 16 “perils” that are covered by your standard policy (iii).

Here’s some of what’s NOT automatically included:

• Earthquakes
• Flooding
• Nuclear Hazards
• Termites
• Mold
• Vehicle damage or theft (this is what auto insurance is for)
• Injury or theft of your pet

7. “I got a Cash Value Policy Because it was Cheaper”

Regardless of what type of home contents policy you’re dealing with (own, rent, etc.) you have two choices when it comes to how that policy pays out. Cash Value or Replacement Cost.

If you opt for a cash value policy to save money, be aware that if anything happens to your stuff the insurance company will pay you for what that item is worth now, not when you purchased it. In some cases that is not enough money to replace the item.

A replacement cost policy may be pricier, but it will pay out the amount required for you to actually REPLACE your stuff.

8. “I Never got Around to Making a List of my Things”

Doing an inventory of your house, condo, or apartment is the first step in determining how much home contents coverage you need.

If you haven’t made a list of what you have, how are you sure that you’ve purchased enough coverage?

Taking pictures or video of all the rooms in the home and making a list of the items’ value will not only keep you from being underinsured, it will also make it easier to file a claim and get fully compensated should anything happen.

9. “I Didn’t Realize I Needed Special Coverage for my Expensive Stuff”

If you have especially valuable items, you may need additional coverage because their value may exceed the limit of a standard policy.

If you are covering any of the items below, watch out for limits. You may need to purchase additional coverage.

• Home computers
• Cash, including coin collections
• Checks, traveler's checks, and securities
• Jewelry and watches
• Precious and semi-precious stones
• Comic books, trading cards, and stamps, including collections
• Antiques and fine art
• Goldware and silverware (theft)
• Rugs, wall hangings, and tapestries
• Firearms (theft)
• Furs or clothing trimmed in fur
• Boats or other watercraft, and related equipment

10. “ I Just Picked the Cheapest Quote I got.”

Shopping around is bar-none the best way to save money on renters insurance, but don’t just go by price! Be sure to compare prices according to the coverage the company is offering you.

Using an online quote site like insurancerates.com to get quality insurance for a really low rate is great– but don’t make the mistake of passing up a bargain for a cheaper policy that only offers the bare minimum.