Renters Insurance
If you are renting or are considering renting your living space, you need to
read this section. If you live in a home you have purchased or are considering
it, read the unit, Homeowners Insurance.
Many people start out renting a place to live. This can be a valid way to go,
especially early in your career when you may be subject to regular moves to take
advantage of career opportunities. When you rent, you need to be aware of one
overriding fact. Your landlord does not carry coverage on your possessions. He
or she will probably have coverage on the rental property—the building
itself—but they will not have any coverage on your furniture, electronics, or
other possessions. You will need to secure that coverage yourself.
The good news is that it is not particularly expensive to secure a good rental
policy. You can probably visit with the agent that handles your automobile
insurance (if you own a car) and for a relatively small premium, you can have
the needed coverage put in place.
Generally speaking, there are two ways that your possessions can be covered. The
first is known as “actual cash value” (ACV). Should you suffer a covered loss,
you will receive the value of the property at the time of the loss. This will
mean depreciating the item for the use that you got out of it. You may have paid
$1,000 for a refrigerator a number of years ago. Under ACV you will get what it
is worth at the time of the loss. A much superior type of coverage is known as
“replacement cost.” Generally that means that if something is lost in a way that
is covered in your policy, you will be given the money to replace it with a new
item. As you might expect, this is type of coverage will be more expensive, but
not as expensive as you might think. It is the way to go despite the additional
expense.
Pay close attention to the other provisions of the policy, assuming that the
worst could happen and that you will need to find another place to live. Make
sure that the policy provides for the additional living expenses that will be
required of you should you lose a place to live, even if only for a few weeks.
It should cover lodging and other incidental expenses.
Pay close attention to the deductibles that will apply, and make sure that you
have enough money in your
emergency fund to cover that deductible. The higher
the deductible, the lower the cost of the insurance. So, take the highest
deductible that you can cover and resolve to invest the difference in some way.
Also take a look at the amount of liability insurance that is included with the
policy. Adding enough to cover your net worth is well worth the additional cost
and should not add too much to your premium.
If you presently own items that are expensive, relative to the cost of most of
the items in your apartment, you may want to investigate listing them separately
on your policy so that you are not confronted with a sub-limit at the time of
the loss. Make sure that any unusual items that you own (family heirlooms,
expensive jewelry, etc.) are covered within the limits and sub-limits of the
policy that you purchase.
WEB SITES
http://apartments.about.com/cs/insurance/
http://www.practicalmoneyskills.com/english/consumers/life_events/apartment/insurance.php
http://www.msmoney.com/mm/life_purchases/insuranc/insurfl_renters.htm
http://www.travelers.com/personal/home/ri101.cfm
http://www.usaaedfoundation.org/insurance/other/renters/ri01.htm
http://www.insweb.com/cgi-bin/gic.exe?id=UzB94xbaYQ-wpGWHlZbh8l8ZtxL&page=/gic/Quicken.htj
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