Spring is a time of graduations. If you’re a college graduate looking to rent a place on your own instead of moving back home, you will need your own renters or tenants insurance in order to financially protect yourself and your belongings.
Renters insurance includes three important types of financial protection:
Coverage for Personal Possessions
Additional Living Expenses
The following checklist can help you make the right decisions when looking at renters insurance:
1. Coverage for Personal Possessions
How much insurance should I buy? Make sure you have enough insurance to replace all of your personal possessions in the event of a burglary, fire or other covered disaster. The easiest way to determine the value of all your personal possessions—including furniture, clothing, electronics, appliances, kitchen utensils and even linens—is to create a home inventory. This is a detailed list of all of your personal possessions along with their estimated value. An up-to-date home inventory will also make filing an insurance claim faster and easier.
The professionals at Allen & Furr can provide you a home inventory estimator.
What is the difference between replacement cost and actual cash value coverage?
An actual cash value policy pays to replace your possessions minus a deduction for depreciation whereas a replacement cost policy will pay the cost of replacing your possessions without accounting for depreciation. The price of replacement cost coverage is a bit more but can be well worth the extra expense as the value of most items tends to depreciate quickly.
What disasters are—and are not—covered?
Renters insurance covers you against losses from fire or smoke, lightning, vandalism, theft, explosion, windstorm and certain types of water damage. Most renters insurance policies, however, do not cover floods. Flood coverage is available from the federal government’s National Flood Insurance Program. Earthquakes are not covered either. You can either get a separate policy or have it added as an endorsement to your renters policy, depending on where you live.
What is my deductible, and how does it work?
A deductible is an amount of money you pay out-of-pocket before the insurance coverage kicks in. Deductibles are available as a specified dollar amount, typically $500, $1000 or $2000, though higher deductibles are available. The larger the deductible, the lower the premium charged for the same amount of coverage, so if you can afford a deductible of at least $1,000, you may get as much as 25 percent off your premium. Remember though, that you will be responsible for the deductible each time you file a claim.
What is a “floater” and do I need one?
If you have expensive jewelry, furs, sports or musical equipment, or collectibles, consider adding a floater to your policy. Most standard renters policies offer only a limited dollar amount for such items; a floater is a separate policy that provides additional insurance for your valuables and covers them if they are accidentally lost. You will need to present receipts and/or appraisals for the items covered by the floater. It is important that expensive items be appraised properly as you will pay a premium based on the appraised value and in the event of a claim, be compensated for this dollar amount. You can ask your insurer to recommend a reputable appraiser.
2. Liability Protection
Do I have enough liability insurance in the event someone sues me? Renters insurance provides liability protection that covers you against lawsuits for bodily injury or property damage done by you, your family members and even your pets. This coverage pays for both the cost of defending you in court and court awards—up to the limit of your policy. Most standard renters insurance policies will generally provide at least $100,000 of liability coverage, but additional amounts are available. Consider whether the amount of liability coverage provided by your policy is sufficient to protect your assets.
3. Additional Living Expenses
If I can’t live in my home after a disaster, will I be covered? If your home is destroyed by a disaster that your policy covers and you need to live elsewhere, renters insurance provides additional living expenses. This pays for hotel bills, temporary rentals, restaurant meals and other expenses you incur while your home is being repaired or rebuilt. It is important to know out how much coverage you have, and what the limits are.
4. Discounts Discounts are often available on renters insurance if you have another policy with the insurer for your car or business. You can also get discounts if you:
Have a security system
Use smoke detectors
Use deadbolt locks
The professionals at Allen & Furr can assist you with all your insurance needs including renters, automobile and health insurance. Feel confident you are protected as you begin on this new life journey.