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There
are some questions you should ask yourself and issues
to consider before you go shopping for renters insurance.
Take a look at actual value vs. replacement cost,
endorsements, and liability.
Dispel
some of the myths of renters insurance. Your landlord's
insurance will not cover your possessions, neither will
your roommate's, and it isn't all that expensive to
purchase.
The first time most people think about insurance is
with their first car or home. Usually this is because
the law or bank requires us to do so. Although renter's
insurance is usually not required, it is just as necessary
to have. Not only will it protect your personal items,
but it will also give you help with temporary housing
and liability protection, such as medical expenses for
people on your property or a lawyer if you are sued
by someone unintentionally injured by you. Once you
determine your need for renter's insurance, knowing
your options will help you choose the best policy.
If
the ceiling in your rented property is damaged by
wind or hail in a storm, of course the ceiling is
covered by your landlord. But what about your brand
new stereo and TV that was damaged? Also, while the
ceiling is being fixed, do you have enough money to
immediately find another place to stay? These are
the types of things that would be covered by your
renters insurance policy. Along with personal property
coverage and living expenses, your policy will also
cover your liability or damage you cause to others
or their property. For example, your girlfriend comes
over to visit and she slips on the ice outside your
door. The same walkway that is your responsibly to
keep clear! Your girlfriend needs medical attention
and decides to sue you! Renter's insurance can't help
with your broken heart, but it will help you pay for
your ex-girlfriend's medical expenses and a lawyer.
Now
that you have decided renter's insurance is for you,
there are some things to consider when purchasing
your policy that will affect the price and coverage:
- Dollar
Amount of Coverage: This is a leading factor in
the price and coverage. A dollar amount is not placed
on each piece of property. Instead a fixed amount
for all of your possessions will be determined.
Of course, the more coverage you purchase, the higher
the price of the policy.
-
Deductible: This would be a leading factor to consider
in the cost and how much you are willing to pay
out of pocket before your insurance kicks in. Coverage's
subject to the deductible would be everything except
liability coverage's, like paying for your girlfriends
medical expenses.
-
ACV (Actual Cash Value) or Replacement Cost: When
the insurance company comes to reimburse you for
your stereo and TV what they give you is determined
by these factors. A basic policy will pay you ACV,
which is the value of the property at the time of
loss. But, if you opt for replacement cost you will
get an actual replacement. For example, your 5 year
old stereo will be replaced with as much money as
it would cost for you to purchase a new comparable
stereo. Expensive items prone to theft such as jewelry
and guns, only have limited coverage so it is wise
to place these items on a separate policy. Replacement
cost is well worth the small amount more it may
cost for your policy.
-
Location and Previous Claims: If you rent in an
area prone to thefts you will probably pay more
for your insurance and if you or the previous person
or neighbors have had a large amount of claims,
this is likely to affect the cost of your policy.
Even
if you feel your personal property is not worth enough
to insure, the value of having liability coverage is
well worth renter's insurance. Remember, as with all
insurance policies, check with your agent on specific
coverage's. Each policy can vary between companies and
states.
A basic renters insurance policy will cover you in case
your belongings are lost due to burglary, fire, burst
water pipes and the like. It will also provide liability
coverage should someone be injured on your property.
Another thing renters insurance will cover is damage
you cause to the landlord's property (say, if one of
your party guests breaks a window). Here are some questions
you will need to consider before speaking to an agent
about getting insurance.
| Replacement
Cost vs. Actual Value |
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A
basic policy usually provides for the actual cash value
of your belongings. This means that a 3-year-old computer
would be covered for its initial cost minus depreciation.
A computer may well have almost fully depreciated after
3 years, so you would receive little or no cash for
it. If you have expensive electronics or other pricey
items which are subject to depreciation, you might want
to consider replacement cost coverage instead. In this
case, you would be reimbursed for the complete current
cost of buying a new computer or stereo. Of course,
replacement cost coverage is more expensive, but may
be worth it in many cases.
Like
any insurance policy, renters insurance will have deductibles.
This is the amount of loss you will have to cover out
of pocket before receiving any money from the insurance
company. For example, if your deductible is $350 and
your computer (on which you've got replacement cost
coverage) would cost $2000 to replace, you would receive
$1650 if it were stolen. The higher the deductible,
the lower the premium, but you must balance your ability
to cover the deductible with the monthly premium savings.
Like
homeowners insurance, renters insurance usually won't
cover you for "acts of God" such as floods
and earthquakes. You can get endorsements for these,
however, and you should seriously consider them. Endorsements
can also be used to extend the amount of coverage on
the policy or the incidents which are covered.
If
something happens that means you can't live in your
apartment for a period of time, you may have to live
in a hotel and eat meals out. Your renters insurance
can and should cover such "loss of use" just
as your auto insurance covers a rental car while yours
is in the shop.
Your
basic renters insurance will include liability coverage
should someone be injured in your apartment. As with
car insurance, there is a per-incident limit on this
coverage, and you should make sure this is high enough.
Increasing liability coverage will often not increase
premiums much at all.
| Floaters
for Special Items |
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If
you have such items as valuable jewelry, antiques, furs,
or other big-ticket items, they often will not be completely
covered under a basic policy. To fully cover these items
from loss, you will want what is called a floater. These
are essentially separate policies covering only these
items and can be very inexpensive relative to the replacement
cost of the items. This brings us to an important thing
to consider when purchasing insurance: the household
inventory.
Before
heading out to shop for renters insurance, take a look
around. Inventory the possessions you would most want
or need replaced were they to be lost as well as any
big-ticket items for which you may need special coverage.
This could include your stereo and/or computer equipment,
antiques, jewelry, furs, appliances, or photography
equipment. Gather details of make, model, serial number,
age and costs (both purchase and current replacement)
and put them in a spreadsheet or just write them down
in one place. It may also help to have photos of these
items for identification purposes.
I
f
you do have such things as antiques, jewelry, furs,
or other items not easily replaced but highly valuable,
it may even be a good idea to have an insurance appraisal
done so you can be sure to have the coverage you need
as well as the paperwork you will need to collect
should they be lost. The appraisal can be done by
an expert in the field (jewelers, furriers, and the
like) and will usually include a photo of the item
and the expert's description and appraisal of value.
These appraisals, as well as a complete inventory
of the items in your property, should be kept somewhere
outside your apartment or at least in a fire proof
safe. Often, you will be able to place copies of such
paperwork with your insurance agent.
Now
that you've considered these items, it's time to head
out and look for the best policy for you.
| Protect
Your Belongings: What
to Think About |
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You
return home to your apartment to discover a water
pipe has burst and your computer is sitting in two
inches of water. You go away for the weekend and come
home to find your home has been burglarized. You have
a party and one of your guests slips in the kitchen
and breaks her leg. The building you live in burns
down, taking all your worldly possessions with it.
These
are scenarios none of us wish to contemplate, but
they may happen at any time. How can you protect yourself
if your home entertainment system is stolen, your
best friend breaks her leg helping you hang curtains,
or everything you own is lost in a fire?
Two
words: renters insurance. Like homeowners insurance,
renters insurance will protect all your personal possessions
from loss and protect you from huge legal and medical
bills should someone be injured in your apartment.
| Myths
and Facts About Renters Insurance |
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My
landlord's insurance covers me.
Not true. This is a common misconception among renters,
and it is untrue in almost all situations. Your landlord
carries insurance that will cover his loss in a situation
where the building is destroyed or damaged in some
way. Your landlord is covered in case someone (including
a tenant) is injured on the property, though not in
your apartment.
Renters
insurance is expensive.
Not true. The average renter can get complete coverage
for a couple hundred dollars or less a year, depending
on where he or she lives. This is a small price to
pay for knowing that you and your belongings are protected,
isn't it?
My
roommate has insurance, I don't need it.
Not true. Your roommmate's insurance will cover her
possessions, but it will not cover yours unless you
are listed on her policy. It is possible (and even
encouraged) for roommates to get a single policy to
cover all inhabitants and possessions in the apartment.
How
do I get renters insurance? It's easy.
If you have a car, talk to the agent who does your
car insurance. If you don't, start with your friends.
Ask them who their insurance agent is. Or head for
the yellow pages. There is also this list of insurance
companies who offer renters insurance, though they
don't have coverage in all areas. Shop around for
the best rates and coverage for you.
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