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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.
An average annual premium for $35,000 renters personal property and $100,000
liability coverage with a $250 deductible ranges from $150 to $250, depending on
where you live — much more affordable than you might think. Since the replacement
cost of the furnishings of a one-bedroom apartment averages $35,000 to $40,000,
this may be the incentive you need to 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. 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. 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. 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 and for injury to other individuals or damage
to their property for which you are held legally liable. For example, you are
distracted while cooking dinner and your kitchen catches on fire, damaging your
home or apartment. You can be held liable for the repairs or replacement of the
building and for anyone that is injured.
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 waterproof and fireproof safe at home and also
in a safe deposit box at your financial institution. Another option is to scan
the information to a disk and store it appropriately.
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Selling A Home
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