What is and why do I need renters insurance?
Renters insurance is the type of coverage consumers most often overlook. If you rent your home, apartment, or condominium or live in military-provided housing and do not have renters insurance, you have no coverage if your possessions are stolen or damaged in a windstorm or fire. You would not be covered if you were held legally liable for injury to someone or for damage to their property.
Do not assume your landlord’s insurance will protect your possessions. Landlords generally carry insurance only on the building itself.
You need renters insurance if:
- You are a student living away from your parents’ home and not covered by your parents’ homeowners insurance policy.
- You do not own a home but are renting a house or apartment, etc.
- You live in military housing. The federal government or privatized housing provider might provide minimal, limited coverage for your personal possessions if they are damaged or stolen from your quarters. Your personal possessions are your responsibility. Determine the limits and extent of your coverage. You might need supplemental coverage to fully protect your assets.
NOTE: If you have been awarded a home and you and the awarding agency are co-owners of the property, you might be required to have renters or homeowners insurance.
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BASIC COVERAGE
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DESCRIPTION
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PERSONAL
PROPERTY
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- May be purchased to cover loss from named causes of losses — named perils. Named perils policies cover property only if it is stolen or damaged by a cause named in the policy.
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ACTUAL CASH VALUE POLICIES
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- Replaces your damaged or stolen property minus a deduction for depreciation.
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REPLACEMENT COST POLICIES
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- Replaces your damaged or stolen property at the price you have to pay when you replace or repair it. These policies are more expensive. To claim replacement cost, you actually must replace or repair the item.
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LIABILITY
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- Pays for damages, such as medical expenses or repairs, if you are legally liable for someone else’s injuries or property damage. For example, if a neighbor trips on your rug and breaks his arm, liability coverage would pay his medical bills.
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ABOUT PREMIUMS
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Premiums for a renters policy are determined by various factors.
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NON-OWNED RESIDENCE
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- Amount of personal property.
- Liability limits.
- Geographic location.
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CLAIMS HISTORY
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- The fewer claims you have, the lower your insurance rate.
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CREDIT RATING
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- Individuals with good financial habits are generally more responsible in other areas of their lives and therefore file fewer claims.
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TO LOWER PREMIUM COSTS
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- Raise your deductible — the amount of damages you agree to pay before your insurer starts paying.
- Maintain a good credit rating.
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To Ensure Sufficient Coverage
Create a record of your possessions, including purchase prices, dates purchased, serial numbers, and receipts. If you have to file a claim, this will ensure you do not overlook anything lost in a disaster. Supplement your inventory with photographs. Store a copy of your inventory, receipts, and photographs as well as hard copies of important electronic documents in a secure location away from your residence, such as a safe-deposit box at a bank or a safe in your attorney’s office. When purchasing a renters policy, you may choose how the insurance company will assess the value of your property in the event of a claim.
What is and why do I need homeowners insurance?
Homeowners insurance can help alleviate the financial burden of having your home or possessions destroyed or stolen. When you buy a homeowners policy, your insurer agrees to pay the cost of repairing or rebuilding your home and replacing your possessions in the event of a covered loss such as a burglary, fire, or theft. The policy also pays damages if you are held legally liable for accidental injury to someone else.
A homeowners policy provides the following types of coverage:
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BASIC COVERAGE
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DESCRIPTION
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DWELLING
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- Covers damage to your home.
- You should buy enough dwelling coverage to completely rebuild your home. Check your policy to see what potential losses are not covered.
- You can buy certain endorsements to provide coverage not generally provided.
- Does not cover flood damage, which requires a separate policy.
- Your mortgage lender will require you to only cover the amount of your mortgage. It is up to you to ensure this covers the cost of rebuilding.
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PERSONAL PROPERTY
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- Covers damage to your home’s contents.
- Coverage is limited on certain high-value items, such as jewelry, furs, guns, personal equipment, or silverware. You might need to purchase a separate policy or endorsement to fully protect items such as these.
- Coverage also might be limited on personal property kept in a vacation home, in your vehicle, or with a child away at school.
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ACTUAL CASH
VALUE VS.
REPLACEMENT COST
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- Pays to replace your home or possessions minus depreciation at the time of loss.
- Replacement cost coverage pays what you actually spent to replace the damaged item at today’s prices, with no depreciation. To claim replacement cost, you actually must replace or repair the item. Replacement cost coverage is generally more expensive.
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LIABILITY
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- Pays for damages, such as medical expenses, repairs, and applicable legal fees if you, your family, or your pets accidentally cause injury or damage to someone or a person’s property.
- No deductible — amount of damages you agree to pay before your insurer starts paying.
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OPTIONAL COVERAGE
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DESCRIPTION
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INCREASED PERSONAL
PROPERTY PROTECTION
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- Provides additional coverage above your policy limits for personal property such as jewelry, furs, silverware, etc.
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BUSINESS AND HOME
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- Provides coverage for your business property you might use in your home business. Also provides liability coverage for any customer who might be injured while on your property.
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ABOUT PREMIUMS
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Premiums for a homeowners insurance policy are determined by various factors.
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YOUR HOME
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- Age.
- Geographic location.
- Type of heating system.
- Proximity to the nearest fire station and fire hydrant.
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CLAIMS HISTORY
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- The fewer claims you have, the lower your insurance rate.
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CREDIT RATING
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- Individuals with good financial habits are generally more responsible in other areas of their lives and therefore file fewer claims.
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TO LOWER PREMIUM COSTS
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- Raise your deductible.
- Inspect your home regularly, and make necessary repairs to keep claims to a minimum.
- Do not smoke. You might pay less to insure a smoke-free home.
- Install smoke detectors, fire extinguishers, deadbolt locks, and a security system that is connected to a central monitoring device.
- Maintain a good credit rating.
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Renters and Home