How to Choose the Right Level of Renter’s Insurance for You
Congratulations for considering this very important coverage. Most tenants believe they are covered under their landlord’s policies. This is not so. The landlord’s policies cover the building’s structure only. So far as your belongings are concerned, you are on your own.
Even worse, you’re a lawsuit target without coverage. Should a house guest break his leg on your Oriental rug or your Mr. Fix-it fix himself while repairing your abode, you may find yourself in the docket. Typical renter’s policies will cover more than $100, 000 worth of lawyer’s bills and damages at a reasonable yearly cost.
There are two ways to estimate how much coverage is required. You may begin by making an inventory of your personal possessions. Consult receipts to find out how much you paid. List everything. Take lots of pictures or a video of the items while you are at it. Remember you will need additional riders for certain high value items such as rare coins or jewelry.
Here is a list of the common items for which additional coverage must be purchased: Money, bank notes, coins, business property (on and off premises), securities, negotiable instruments, watercraft, including trailers, furnishings and equipment, trailers (other than boat trailers) jewelry, furs, firearms (limitation applies to theft only), silverware and gold (limitation applies to theft only).
Once you have a list of your belongings, place a copy in a safe deposit box far from potential destruction. You may want to keep your heirlooms and other irreplaceable items there, too.
Although this is the most accurate method, many of us will be uninsured forever if we must make a meticulous accounting prior to buying a policy. Fortunately, there are industry-standard methods for estimating your exposure to loss. Your insurance agent can estimate what will be needed through a that questionnaire that determines probable exposure based on dwelling size and other factors.
Regardless of whether you let your agent do most of the legwork or whether you walk in with a complete list, you will be faced with one important decision: Do you want to be covered for the actual value of your possessions, Actual Cash Value (ACV) or the cost of replacing your belongings at today’s higher costs, known as Replacement Value?
Inflation simultaneously increases the cost of replacement while normal wear and tear reduces the value of what you already own. With Actual Cash Value (ACV) you be in the perverse position of seeing replacement items cost a fortune while your destroyed or stolen possessions are valued at nothing. You may wish to buy a Replacement Value Policy instead.
If you live in a flood, earthquake or hurricane prone area, be sure to add these coverages, they are not part of the basic policy.
Don’t wait for disaster to strike. Call your agent now.