Thursday, December 20, 2007

The Basics of Renters Insurance

WARNING! Theirs a lot of good information here so pay attention and take notes. If you have any questions feel free to write them down in the blog or give me a call or email me and I will respond promptly. Thanks.

Renters face the same risk as homeowners in cases of disasters striking their dwelling. Your landlord or condo association may have insurance, but this only protects the building, not your things in it. Renters insurance can protect your belongings in case of disaster.

What standard policies cover:

There are several types of residential insurance policies. The HO-4 policy is designed for renters, while the HO-6 policy is for condo owners. Both HO-4 and HO-6 cover losses to your personal property from 16 types of perils:

· Fire or lightning
· Windstorm or hail
· Explosion
· Riot or civil commotion
· Damage caused by aircraft
· Damage caused by vehicles
· Smoke
· Vandalism or malicious mischief
· Theft
· Volcanic eruption
· Falling objects
· Weight of ice, snow, or sleet
· Accidental discharge or overflow of water or steam from within a plumbing, heating, air conditioning, or automatic fire-protective sprinkler system, or from a household appliance.
· Sudden and accidental tearing apart, cracking, burning, or bulging of a steam or hot water heating system, an air conditioning or automatic fire-protective system.
· Freezing of a plumbing, heating, air conditioning or automatic, fire-protective sprinkler system, or of a household appliance.
· Sudden and accidental damage from artificially generated electrical current (does not include loss to a tube, transistor or similar electronic component)

Floods and earthquakes aren't on the list. If you live in an area prone to either, you'll need to buy a separate policy or a rider.

Actual cash value vs. replacement cost.

Make sure you let your agent know about any particularly valuable items you have.
One thing to look at is whether the insurance company will offer "actual cash value" (ACV) or "replacement cost coverage" for your belongings. As the name implies, ACV coverage will pay only for what your property was worth at the time it was damaged or stolen. So, if you bought a television five years ago for $500, it would be worth significantly less today. While you'd still need to spend about $500 for a new TV, your insurance company will pay only for what the old one was worth, minus your deductible.

Replacement cost coverage, on the other hand, will pay what it actually costs to replace the items you lost, again minus the deductible.

In some regions, most insurers write ACV coverage. In others, they'll quote you replacement cost coverage by default. Replacement cost coverage will cost you more in premiums, but it will also pay out more if you ever need to file a claim.

Let your agent know about any particularly valuable items you have. Jewelry, antiques, and electronics might be covered up to a certain amount. If you have some items that are unusually expensive, such as a diamond ring, you'll probably want to purchase a separate rider. If you don't talk to your agent about an expensive item when you buy the policy, you probably won't be able to recover the full loss.

Take inventory.

To ensure you are compensated for any belongings you lose from a fire, storm or other catastrophe, you should inventory all of your personal belongings. Your inventory should list each item, its value, and serial number. Photograph or videotape each room, including closets, open drawers, storage buildings, and your garage. Keep receipts for major items in a fireproof place.

Footing the bill when your home is unlivable.

If your apartment or condominium becomes uninhabitable due to a fire, burst pipes, or any other reason covered by your policy, your insurance will cover your "additional living expenses." Generally, that means paying for you to live somewhere else.

Liability protection is also standard with most renters’ policies.

This coverage has a limit of about 30 to 50 percent of the total value of the policy. So, if you're insured for $100,000, your "additional living expenses" limit will be $30,000 to $50,000, depending on your policy terms. Your insurance company will continue to pay while your home is being repaired or rebuilt, or until you permanently relocate. Sometimes 12 months is the longest an insurance company will continue paying. With some policies, you're limited to what the insurance company considers a "reasonable length of time."

Additional benefits.

Liability protection is also standard with most renters and condo policies. This means if someone in your unit slips and falls, you're covered for any costs, up to your liability limit. If this person sues you, you're covered for what they win in a court judgment as well as your legal expenses, up to your policy's limit.

Keeping your premium low.

Just like any other type of homeowners insurance policy, your premium depends on a number of factors: where you live, your deductible, your insurance company, and whether you need any additional coverage.

There are ways to reduce your renters or condo owners’ insurance bill.

Increasing your deductible (the amount you pay before your coverage kicks in) is one strategy. Make sure you can afford whatever deductible you choose.

If you're thinking about getting a dog, you might want to think twice. Some insurance companies are reluctant to write policies for owners of certain breeds.

Most insurers offer a discount for "protective devices," including smoke and fire detectors, burglar alarms, and fire extinguishers.

Some insurers might offer discounts to policyholders who are over age 55 and retired. Others might offer a discount if you buy both an auto and renters policy (called a multi-line discount).

Copywrite -
Sept. 24, 2007

The best advice is to talk with your insurance agent. But how do you know if your agent is going to be the best fit for helping you out. Well, go with the experience. The person that I refer all of my clients to is Kevin Hauglie with Farmers Insurance Agency.

Kevin has over 25 years experience in the insurance industry and he is extremely knowledgeable and shares the same level of professionalism as myself and Empire Options does.

Most of the time he has helped our clients reduce there auto loans enough that the savings will pay for the renters policy! And by the way, if you’re thinking that the renters’ policies are pretty expensive…there not. In most cases they are anywhere from $15 - $25 per month.

When my wife and I bought our first home our truck was broken into and my laptop and a few other expensive items were stolen. The total cost of the items came to around $5000! I figured this would be covered in my auto insurance policy…right? WRONG! It’s covered under your homeowner’s insurance policy because it is personal property. Now let’s say that we didn't own the home and this incident happened 2 months prior to us moving in…then what? Well, we would have been out of luck. Renters insurance would cover instances just like this one.

So moral of the story is, GET RENTERS INSURANCE! You can’t afford not to have it.

Do you have any testimonials or experiences of this happening or maybe you have renters insurance and it has been put to good use. I would like to hear about it. Write in my blog to let everyone know of your thoughts.

Also, if you would like Kevin Hauglies' contact information I would be more than happy to give it to you. Just let me know and I will send it your way.

Dedicated to your success,
Kenton Becker
Managing Partner / Lakemont Mortgage Specialist
License # 510-LO-36929

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