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Renter's Insurance Information

Renter's insurance gives tenants the same protection that homeowners receive from their home policies. If you rent and you have valuable possessions that you couldn't afford to replace, you should consider insuring your possessions.



Getting Started
Can you afford to replace everything you own? Could you replace enough for your family to get by fairly well? If you're a tenant, and you answered no, as most of us would, you need to consider purchasing renter's insurance. With starting premiums of $11-15/month, it just might be a smart choice for you.

Tenants are responsible for insuring their personal possessions. Your landlord's policy covers the structure of the property; it covers his possessions but seldom if ever covers the personal possessions of tenants. In the event of a disaster, uninsured tenants are on their own.

Be sure to read your documents carefully. Regulations and costs vary from state to state. Understanding your policy can help guarantee that you have the protection you need.

Common Terms
Damages - These policies protect you against damages, including damage from fire, lightning, windstorms, hail, explosions, smoke, vandalism, plumbing leaks, riots, vehicles, snow and ice related damages, and falling objects. The word damages is also used to define the dollar amount for harm to property.

Replacement of Personal Property - For most tenants replacement of personal property, or content coverage, is the primary reason for purchasing insurance. This provision protects the contents of your rented home or apartment.

Replacement Cost Value (RV) - Replacement cost coverage pays the full price to repair or replace most personal property in your residence with no deduction for depreciation. Premiums stand to be 10% more than a standard policy.

Actual Cash Value (ACV) - A standard policy covers actual cash value for personal possessions. Under ACV, customers are reimbursed for the value of the item at the time it was damaged or destroyed. For instance, if your 3-year-old laptop is stolen, you will receive enough money to get another 3-year-old laptop.

Loss of Use - If a hazard forces you out of your residence, "loss of use" covers a percentage of hotel bills, temporary rent payment, restaurant bills, laundry, etc. Your living expenses are covered until the damage is repaired.

Personal Liability - Another standard inclusion of is personal liability. If you are sued, this provision helps with legal costs. You may be covered up to $100,000 for liability claims and lawsuits.

Liability for Bodily Injury - If you are held responsible for bodily harm to a guest in your residence, liability helps cover your costs. The bodily injury may result from your actions or the actions of your children. Some policies even cover pets.

Liability for Damages - Liability for damages also helps with legal costs and liability connected to damages to property.

Rider - Additions to the standard policy for the purpose of extending coverage for certain items are known as riders.

Deductible - Each time you make a claim for property loss, you will pay a deductible. This means that you pay the first $250-$2500 before your coverage takes effect. Renter's deductibles don't cap out the way medical deductibles do during a calendar year. You pay a deductible only for property loss, not for liability claims.

Benefits and Limitations
A renter's policy offers multiple benefits. Most obviously, if you are the victim of theft, vandalism, or a litany of other unfortunate incidents that leave you without some personal possessions, you have a way to replace them. Naturally, the policy becomes increasingly valuable when the loss is widespread such as in a fire. You could perhaps recover from the loss of one or even two items, but could you recover from the loss of all appliances, electronics, jewelry, firearms, clothes, etc.? Even if your possessions were quite modest, it could take years to be back where you were.

A second benefit is peace of mind. When you hear the horror stories of tenants who lost everything, it can be quite disturbing. If you're insured, you'll have some cash to start over.

Policies do have their limitations. Unless stated, these policies do not include flood or earthquake damage. Coverage for these two damages requires either a separate policy or a rider.

Policies limit coverage for expensive items such as jewelry, firearms, furs, musical instruments, etc. If you want coverage beyond the standard, you may need a rider.

College students living in on-campus housing are often covered by their parents' homeowners insurance. Students living off campus or students of parents who are not homeowners may need renter's insurance.

Credit card and check forgery up to $1000 are a standard coverage in most states.

Your personal possessions are covered when you travel, so items stolen while you're on vacation can be replaced.

Tips
Special Options - For tenants who travel outside the country or who have substantial assets, additional coverage may be advisable. Items covered by special options do not always require an appraisal or listing in the policy.

Bundles - Consumers have grown accustomed to bundling TV, phone, and internet to save money. The same strategy works with insurance. Get more than one policy through the same agency and enjoy a discount.

Deductibles - As with most insurance policies, you are rewarded if you will assume part of the risk. Your willingness to pay a higher deductible will result in lower premiums.

Worth - Evaluate the value of your possessions. Based on the value of the contents of your home, you can determine what coverage you need. While you're taking inventory, snap pictures or video as verification of your ownership.

Top Agencies
The survey results are nationwide. You may find an agency that provides much better local service than the ones listed, and then discover that geographic limitations knock it out of the running as a top provider. As always, check local agencies first.

Here are four agencies that are consistently at the top when considering rates, availability, and service.

Allstate
Liberty Mutual
Travelers
American Family

Unless your assets are less than the cost of premiums, financial advisors highly recommend renter's insurance. Only about 40% of tenants are insured, but can you afford to be one of them?

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