Renters Insurance
However, just as most of us would not think of owning an automobile
without auto
insurance, renters need protection for their personal possessions
and from liability. Even the smallest apartment can easily contain personal
property worth thousands of dollars. And all of us are at risk for liability.
Common Renting Myths
- MYTH #1 - Insurance is too expensive. Some renters fail to insure
their personal possessions because they believe insurance is too expensive,
but renters insurance is typically available for as little as $100
a year.
- MYTH #2 - My landlord's insurance protects me. Many renters think
they are protected under their landlord's policy. However, the property
owner's insurance covers the building itself and seldom a tenant's
possessions. Clarify this with your landlord before signing a lease.
- MYTH #3 - My landlord is liable if someone trips in my apartment
and gets injured. Again, the owner's policy may specifically exclude
liability for something that occurs within your rented residence.
You could be held liable for injury to another person or damage to
another person's property if the incident occurred within your rented
residence.
A Look At Premiums
Renters
insurance, because you are not insuring a building, is surprisingly
inexpensive. Of course, like all property protection policies, the value
of the property to be insured and other risk factors are weighed by the
insurance company to determine your premium. As with your automobile insurance,
your renters deductible is the amount you agree to pay in the event of
a loss. For example, if your $2,000 stereo is stolen from your home, and
you have a deductible of $250, the insurance company would pay you $1,750,
which is $2,000 minus your deductible.
Coverage For All
Renters insurance offers the same general personal property coverage
and liability protection as a homeowners policy. Property insurance covers
the cost of repairing or replacing personal property that has been damaged,
destroyed or stolen. Your property is covered both within your home and
when you are traveling.
You also receive liability protection. If someone suffers an injury or
damage to their property because of something you did or did not do, you
could be liable. If, for example, your grandmother's oak dresser dents
the walls in your apartment's lobby while you are carrying it into the
building, you could be held liable. Likewise, if a fire starts in your
apartment and spreads throughout the building, and you are deemed at fault,
you could be held liable for damage to the entire building.
In addition, most renters policies include coverage for additional living
expenses (also called "loss-of-use" coverage) if you are forced
by fire or other damage to temporarily live elsewhere.
Alterations For a Better Fit
Most policies limit the amount of reimbursement for theft of valuable
items, such as jewelry, furs, silverware and guns. If you have some particularly
valuable items in these categories, you may need to purchase additional
coverage called a "floater." These types of policies cover each
item individually and are usually quite inexpensive.
Other additions to your renters insurance that add or change the policy's
provisions are called endorsements. Some endorsements extend the number
of risks insured against, some cover property otherwise excluded and some
increase the amount the insurer will pay for a covered loss.
Also, it is important to note that the standard policy excludes damage
from earthquakes and floods, so talk to your independent insurance agent
about coverage for these incidents.
What It's All Worth
If your property does get damaged, destroyed or stolen, the insurance
company will use one of two ways to determine its value:
- Actual Cash Value - The replacement cost of the item minus depreciation.
For example, a new television set may cost $500. If your 7-year-old
TV set gets damaged in a fire, the value of it might have depreciated
50%. Therefore, the amount of your coverage for that set would be
$250.
- Replacement Coverage - The cost of replacing an item without deducting
for depreciation. So today's cost for a TV set with features similar
to the 7-year old one damaged by fire would determine the amount of
compensation. If it still costs $500 today, that would be the amount
of your coverage.
You can select which type of coverage you would prefer. Having replacement
coverage adds only about 10% to 15% to the cost of the premium and may
well be worth this slight increase.
Renting With Roommates
Usually, it is best if all roommates are on the same policy although
it is possible for each to purchase his or her own coverage. If you do
need to "go it alone", you alone receive the security of renters
coverage.
A Final Note
At least once during a lifetime most people will rent a home. Paying
rent instead of a mortgage payment does not make your personal possessions
any less valuable.
Should your belongings be damaged or destroyed, or should someone suffer
an injury in your home, renters insurance can offer the peace of mind
of knowing that you are protected. Coates Insurance Agency can help you find
the best combination of coverage and price to meet your rental insurance
needs.
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