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If your television is stolen from the trunk of your vehicle, auto insurance will
not replace the television. For that, you need property insurance — either a renters
or homeowners policy.
Renters insurance is the type of coverage most overlooked by consumers. If you
do not have renters insurance, you have no coverage if you lose your possessions in
a burglary, windstorm or fire. You would not be covered if you were held liable for
injury to someone else or for damage to their property either.
Do not assume your landlord’s insurance will protect your possessions. Landlords
usually carry insurance only on the building itself. The same applies to military
housing. The federal government provides minimal, limited coverage to your personal
possessions if they are damaged or stolen from your quarters. Your possessions are
your responsibility.
Military installations that are managed by private management companies may provide
some coverage for personal property to their renters. If you live in this type of home
or apartment, check with the management company to determine the limits and extent
of your coverage. You may need to purchase supplemental coverage to fully protect
your assets.
If you are a student and covered on your parents’ policy, that coverage will
probably end when you graduate. You should be prepared to obtain coverage of your
own.
Renters insurance is typically affordable. Depending on your location, $35,000
personal property coverage and $100,000 personal liability coverage with a $250
deductible would cost from $193 to $285 annually, or from $16 to $24 monthly.
Replacement cost coverage is also more affordable than you might expect.
Because it can cost from $35,000 to $40,000 to replace furnishings in a
1-bedroom apartment, you should consider renters insurance coverage.
Coverage For Personal Property
The first part of a renters insurance policy is coverage for personal property,
which protects your belongings in case they are stolen (from your home, apartment
or vehicle). You are also protected for damage caused by certain perils named in
the policy. For example, if water pipes in your home or apartment burst, causing
damage to personal rugs and furniture you will have coverage minus the deductible.
Without renters insurance, you would have to cover all expenses on your own.
When you buy a renters policy, you choose an actual cash value policy or
replacement cost coverage. Actual cash value coverage pays to replace your
possessions minus depreciation and the deductible. For example, if your television is stolen,
your insurance company would settle the claim by taking the current cost of
the television, then decreasing your payment on the claim according to the
age of the television.
Replacement cost coverage would pay you what you actually spent to replace
the television at today’s prices with no depreciation but minus the deductible. To claim replacement cost,
you must actually replace or repair the item. Replacement cost policies will always
cost slightly more than actual cash value policies, because insurance claims filed
on replacement cost policies usually cost the company more than those filed on
actual cash value policies.
Liability Coverage
The second part of a renters insurance policy is personal liability coverage,
which pays for medical expenses to other individuals for which you are held legally liable.
For example, you are distracted while cooking dinner and your kitchen catches on fire, you may
be held liable for the property damage and for any resulting injuries.
A deductible does not apply for liability coverage.
Possessions Inventory
To file an insurance claim, you have to list everything lost to fire, theft or
any other covered loss. If you tried to remember everything you lost, you would
probably miss some things and get a smaller payment than you were entitled to
from your insurance company.
Use the Inventory Work Sheet
to list all your possessions. It is valuable in determining how
much coverage for personal property is needed.
Retain all receipts, since some insurance companies may require them for
documentation. Keep a master list of the serial numbers and original prices.
Consider photographing your personal possessions. Store a copy of the inventory,
the receipts and photographs
in a safe deposit box at your financial institution or in another secure location away from your residence.
You should also store a hard copy of important online documents. Another option is to scan
the information to a disk and store it appropriately.
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Selling A Home
Selling A Home
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