When you purchase renters insurance, you hope that this precautionary measure will never have to take effect. But renters insurance covers against very real threats. Before you ever have to file a claim, it’s important to understand the limits of your policy and how you will receive compensation after a claim.
Insurance Underwriting 
Before you receive compensation, your insurance company will send an insurance underwriter to investigate the claim. They will consider the damage compared to your coverage and calculate how much—if any—compensation you will receive. There are some rare cases in which a claim may be denied. Certain instances in which a claim could be denied includes:
- Damage not covered by your policy
- Items not covered by your policy
- Intentional damage
- Damage that occurs as a result of the policyholder committing a criminal act
Replacement Cost Value vs Actual Cash Value
When you set up your renters insurance policy, you typically have the option between receiving compensation at replacement cost value or actual cash value. Replacement cost value provides enough compensation to replace your lost or damaged items with items of similar or identical value. Actual cash value provides compensation for the cash value of your lost or damaged items. This type of compensation accounts for depreciation, which means that as the value of your item goes down, so does the amount that you will receive after filing a renters insurance claim. This type of compensation typically costs less, but you are less likely to be able to replace your items completely.
You may be able to change which type of compensation you receive, but you will not be able to change it for a claim that is already open. For example, if you have an actual cash value policy and file a claim, you cannot then change your policy to receive the replacement cost value for that same claim.
When to File a Renters Insurance Claim
Whenever an accident occurs, most people immediately respond with filing an insurance claim. This isn’t always the best decision, however. First, consider the damage compared to the cost of your deductible. If the price of your deductible is more than the out of pocket expenses to repair or replace the damage, you may not want to file a renters insurance claim. Having claims on your record can also raise your monthly premiums.
But if the cost of repairs is more than your deductible by a substantial amount, you should consider filing a renters insurance claim.
How Much Will I Receive in Renters Insurance Payouts?
The amount you will receive depends on your policy and the amount of damage as confirmed by the insurance underwriter. If needed, you may hire a lawyer to argue how much compensation you receive after an accident. Keep in mind your policy’s limits and exclusions, however.
Renters insurance policies often exclude:
- Flood damage
- Earthquake damage
- Criminal acts
There is also limited coverage for certain items such as jewelry, electronics, furs and art. You may purchase additional policy floaters to cover these items.
How Much is Renters Insurance?
Renters insurance costs vary depending on your credit score, location, coverage limits and claims history. On average, renters pay around $15 a month. Renters insurance generally covers $100,000 in personal liability insurance and $30,000 in personal belongings coverage.
How Long Do Renters Insurance Payouts Take?
After an accident, it’s crucial to file a claim as soon as possible. Most insurance agencies require you to file a claim between 48 and 72 hours of an incident. The time it takes to receive compensation depends on the insurance agency and the incident being investigated.