Cover Me!

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Author: Unknown

In the spring of 2004, Sara Shepard had it all--a great job in television production and a beautiful apartment that she rented With two friends in New York City. Shepard, 26, was away for the weekend when she got a call from her roommate: "Sara, don't go home … because you don't really have a home to go home to."

Their apartment had been gutted by an electrical fire.

Although the apartment was destroyed, it wasn't a total disaster. When Shepard moved to New York the year before, she had purchased renter's insurance. "My mom had been so relentless and obnoxious about me getting renter's insurance that I finally [gave in] just to get her off my back," she says. "Luckily it was only about $15 a month."

While a landlord's insurance will replace the physical surroundings--walls, ceilings, windows--in the event of disaster, it won't replace your own stuff. That's where renter's insurance comes in.

Renter's insurance will cover your belongings in the event of theft, fire, storm damage, or explosion. The cost of renter's insurance depends on the amount and kind of coverage you select. For example, if you calculate that your belongings are worth $10,000, you will want coverage for that amount. You'll want to be insured for the replacement cost of your items, rather than their actual cash value (ACV). Replacement cost means that your 10-year-old mattress will be replaced with a new mattress, similar in quality to your original one. ACV coverage means that you'll be reimbursed only for the amount that the 10-year-old mattress was worth on the day of the fire--significantly less.

Face it, when disaster strikes, you want the aftermath to be as smooth as possible. "Because I have renter's insurance, I was completely covered for food, lodging, and all my personal property damaged in the fire," Shepard says. "Getting renter's insurance was definitely the best piece of advice my mom could have given me!"

PHOTO (COLOR): Sara Shepard (left) came home to this unpleasant scene in her New York City apartment.