Renters Insurance

In case of a catastrophe, renters face equal if not higher risk than homeowners. Your landowner or condominium unit association may have home insurance but that policy would only cater damages to the building and not your (i.e. the renter’s possessions). Renters insurance protects renters against loss of valuables in case of a catastrophe. If you are looking to buy a renters insurance policy you will come across a large number of options covering as well as home or condominium owners. HO-4 covers renters whereas HO-6 covers home or condominium owners. Both HO-4 and HO-6 cover losses from various sources including fire, lightning, windstorm, hail, bomb explosion, civil commotion, smoke, vandalism or malicious mischief, theft, damage by glass, volcanic eruption, falling objects, water related damage from home utilities and electrical surge damage etc.

An important consideration for buying renters insurance is what the insurance company pays (i.e. actual cash value or replacement value) for your possessions. Actual cash value will reimburse policyholder(s) for total worth of their possessions at the time they were damaged or stolen. For example, if a microwave oven were bought five years ago for $400 it would be worth considerably less today. However, in case of loss you would require $400 to replace the microwave oven with an identical one. Thus the renter’s insurance company will pay $400 less your deductible. Deductible is the percentage of total loss you undertake to pay yourself. It is integral to choose deductibles wisely because insurance companies do not reimburse a cent until you have paid the deductible in full. Higher the (amount of) deductible lesser will be premiums of your insurance policy. Replacement cost in contrast to actual cash value reimburses policyholder for the amount needed to replace her valuables lost less the deductible. Replacement cost compensates actual replacement value of possession up to the limit declared in your renters’ insurance policy. In other words, the insurance company will pay actual price of replacing your possessions. Your insurance agent can and should help you understand nitty-gritty’s of the claims process. Most insurance companies provide actual cash value coverage for renters insurance. Although replacement cost renters insurance policy will have higher premiums, it would pay more in case of a claim.

Most insurance companies offer additional benefits to renters and home or condominium owners. Waterbed liability coverage is provided for most renters (and home or condominium owners’) insurance policies. Waterbed liability coverage provides for damages in cases your waterbed bursts and water leaks to the apartment below yours damaging the residents’ property. Nearly all renters’ insurance policies offer liability protection. Liability coverage offers for medical expenses up to the limit of your liability insurance if a person falls in your house. Premiums for renters’ insurance policies depend on your location, deductible, insurance company and amount of additional cover purchased. If you are living in a house or condominium as tenant renters insurance is a must have. Always look at a number of renters insurance policies comparing premiums, benefit and losses covered etc. offered by different insurance companies. There are ways to decrease your renters’ insurance premiums. Increasing your deductible is one way. However never choose a deductible you would not be able to afford. The majority of insurance companies give discounts on protective devices including smoke and fire detectors and fire extinguishers. Discounts may also be offered to retired policyholders and those above 55 years of age. Bundle discounts are available in case you purchase all your insurance policies from the same company.