Did You Know You Can Have Renters Insurance For As Low As $10 A Month
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Why Should I Buy Renter's Insurance?
Rental Insurance is one of the last things most renters think about when faced with moving. However, you really should consider it. Most renters do not realize that if there is a problem in there home, they are not covered by the landlord’s insurance. Fire, theft, hurricanes, roof and plumbing leaks and many other occurrences can damage your personal property. Therefore, to protect yourself and you valuables, renters are encouraged to obtain renters insurance. Below we have outlined what you need to know before you get started.What is Renter's Insurance?
Renters insurance is an insurance policy that protects you from a variety of perils that might occur to those who rent. Most policies cover the following losses:- Windstorm or hail
- Fire or lightening
- Explosion
- Riot or civil commotion
- Aircraft
- Vehicles
- Smoke
- Vandalism or malicious mischief
- Theft
- Damage by glass or safety-glazing material that is part of a building
- Volcanic eruption
- Falling objects
- Weight of ice, snow, or sleet
- Water-related damage from home utilities
- Electrical surge damage
What do I get for my money?
To begin, you need to decide how much coverage you need. This varies and will depend on your location. Typically, you can purchase a policy that covers at least $15,000 in personal belongings and several hundred thousand in liability for a couple hundred dollars a year.The next major consideration is the type of policy you are being offered: ACV (actual cash value) or replacement cost. ACV coverage will only pay you for what your belongings were worth at the time they were stolen or damaged. If you purchased a new television when you moved in for $1500 and it was stolen a year later, you would only receive what the television was worth when it was stolen, not the price you purchased it for. You will pay higher premiums with replacement cost coverage, however, if something happens, you will be paid the amount that it will actually cost to replace your items.
You’ll also need to let your insurer know of any particularly valuable items you own, like a piece of jewelry or expensive electronic equipment. If you purchase a separate rider for these items, they will be covered individually. Most policies do include liability coverage that will cover the costs for any injury to yourself or visitors to your home. Policies can also include specials provisions (i.e. waterbed liability that cover any water damage resulting from a broken bed). If you have something like this in your home, double check your policy to make sure it is detailed within.
If you or your home owner has installed smoke detectors, fire extinguishers or burglar alarms, you may be eligible for a discount. If so make sure to mention these when you are purchasing a policy.
Another important provision included in most policies is coverage for additional living expenses. This means that your insurer will cover your living expenses in another location, if your home becomes unlivable. The typical limit is 30 to 50 percent of the total value of the policy. You will be limited to what your company considers a reasonable length of time for rebuilding or relocating, often twelve months.
What do I need to do to protect myself?
After you move in, take inventory of all the items in your home. Insurers state that most people underestimate the value of their possessions and therefore don’t have enough personal property coverage. Experts recommend making an inventory of each item including its value and serial number. You should also photograph or videotape each room and be sure all the items of value are clearly visible. If you make any major purchases, keep the receipts. Be sure to store all the documentation in a fireproof box, on a digital file with online access or in a bank safety deposit box so that your proof is not destroyed in the event of a fire or natural disaster. If you own a dog, be careful—some breeds are often not covered by insurers.Remember, that like other types of insurance, your premium depends on factors like where you live, your company, your deductible and any additional coverage you purchase. If you want to pay less for your policy, consider choosing a higher deductible. This is the amount you have to pay if you do have to use your policy. For example, if you have a kitchen fire, you may have to pay a $1,000 deductible before your insurance company will pay up for additional damages. Renters insurance is one of the most overlooked types of policies. However, those who have had to use it know its value. Buying a policy insures not only your belongings, but also gives you peace of mind—and that’s something hard to put a premium on.
A landlord's insurance policy, also required by the mortgage bank, covers the building and any outbuildings and protects the landlord against lawsuits arising out of accidents on the property. However, landlord insurance does not cover the personal possessions of the tenant. This is a piece of information that seems to come as a shock to many tenants after disaster strikes.
A staggering number of renters (and possibly a lot of condo owners, but more about them in a minute) do not carry renters insurance. Marshall Loeb, writing in MarketWatch last year estimated that nearly two-thirds of the 81 million people who rent their homes are uninsured for their contents or for any liability arising out of their tenancy.
While some renters may assume that they are covered by some mythical insurance umbrella held by the landlord, others simply do not associate the need for insurance with their own circumstances until it is too late. They aren't homeowners so they don't need homeowners insurance, right? They do not think beyond that question and many probably don't even know that tenants' insurance exists.
If you rent, look around. You probably have a pretty substantial amount invested within those walls you do not own. A stereo, high-def TV, a business and a leisure wardrobe, all of those small appliances in the kitchen, the electronics in the study; even if your furniture was bought second hand or from WalMart it all adds up and should disaster strike, everything will have to be replaced out of pocket.
And there is the matter of liability. Should your television repairman trip on the front walk he will probably sue your landlord. But if the repairman takes a swan dive over a poorly positioned coffee table inside your apartment or if sweet little Fluffy decides that his ankle looks like lunch it will not be your landlord's problem. It will be yours.
Tenant's insurance covers personal property within a home or apartment against the same types of loss covered by homeowners insurance - fire, theft, vandalism, and water damage (but not flood damage and probably not earthquake damage either) as well as protecting your interests should someone have an accident within your dwelling unit for which you might be held liable.
Condo owners sometimes are unknowingly or carelessly uninsured even though they are "homeowners." Condominium associations carry a master policy which insures the physical structure of the building or buildings and protects the association (and its owner-members) against any civil action against the association. A bank that gives a mortgage on an individual unit is pretty uninterested in its borrower's 108 inch plasma TV and is more than satisfied with proof of a master policy on the condominium. Therefore, the pressure on a homeowner to maintain appropriate insurance is usually absent in the case of a condo owner. The condo owner may assume that he is somehow individually protected under the master policy or he may be pinching a few pennies at a time of unusual expenses. In any case, his personal property is not covered and the owner is left wide-open for lawsuits if something untoward should occur within his own walls.
Tenant insurance (a term that we will use here to apply to a condo owner's policy as well) is usually available from any agent who writes homeowners' insurance and it is not expensive. A typical policy that would insure personal property of $25,000 and liability up to $100,000 will cost around $125 per year in most areas. Be aware, however, that expensive jewelry, coin or stamp collections, high end art, antiques, sterling silver, oriental rugs, or really expensive electronics may not be included in the coverage without a rider that specifically covers such items (named coverage) and these can be expensive. It is also possible to buy earthquake or flood coverage but again at a premium price.
Make a list of what you own beyond the ordinary and go over the list item by item with an experienced insurance agent. The cost of renters insurance will also vary depending on the deductible chosen, typically $250, $500, or $1,000, meaning that the insured will have to pay that much toward any claim before the insurance kicks in. Also, as with homeowner's insurance as we discussed last fall, policy prices will vary depending on whether belongings are to be valued at replacement cost or at actual cash value. The difference is critical at a time of loss. If a five-year-old stereo is stolen, a replacement cost policy will pay an amount sufficient to replace the item with a comparable unit; an actual cash value policy will depreciate the item a percentage amount for every year since it was purchased, often as much as 50 percent. While some recovery is better than none, talk with your agent about the cost of a full replacement cost policy.
