Renter's Insurance and Retirees

Does your house feel empty and oversized now that your kids have homes of their own?Maybe now is the time to move to a condo or apartment. You'd be free of mowing the grass, cleaning out of the gutters, and shoveling the driveway. And perhaps best of all: no more property taxes!

If you decide to downsize your residence and rent instead of own, you’ll no longer need homeowner’s insurance. Even so,you’ll still have stuff to insure, and renter's insurance is your financial solution.

What Does Renter’s Insurance Cover?

Consider these attributes of coverage with renter’s insurance:

1.      Loss of property.Renter's insurance will cover the loss of your personal possessions in the same situations that your homeowner's policy covered. This will include occurrencessuch as fire, theft, storm damage, and water damage.

·         Be aware that certain types of property like jewelry, high-end electronics, and antiques may require specific coverage with a rider.

2.      Add a rider for earthquakes, floods, or hurricanes.As with homeowner's policies, damage from earthquake and flood typically are not covered. Separate coverage or a rider is required if these are relevant to your geographical area.

·         Inquire about damage from hurricanes if those can be an issue where you live. After a hurricane, you may find it difficult to collect, so ensure you know what you're getting up front.

3.      Actual replacement cost vs.cash value.When looking at policies, understand whether the policy covers the replacement cost or the cash value.

·         If only the cash value is covered, for example, you won't receive enough to fund the replacement of your 10-year old leather couch.

·         Purchasing a policy that provides the actual replacement cost will cover what it really costs you to replace your property, but the premiums will be higher.

4.      Policy limits. Know the limits on the coverage within your policy. Some policies have a cap on the total payout, too.

5.      Liability.Renter's policies usually cover some liability.

·         For example, if someone slips in your apartment and breaks his arm, you're likely to be covered.

·         You may also be covered if your dog bites someone, but certain breeds are frequently excluded, so be sure to check on these restrictions if you have a dog.

·         Any accidental damage you cause to the building is also usually covered. So if you trip and put your shoulder through the dry wall, your insurance should cover the cost to repair the wall.

Cost

The cost of coverage is usually quite low - often no more than $100 per year.

The factors that determine the cost include the amount of the deductible, your location, and your specific needs beyond the basics. Discounts are usually available for having safety features like burglar alarms, smoke detectors, and fire extinguishers. Having additional policies with the same insurance company can also reduce your cost.

You can lower your premiums by having a sprinkler system for fire, dead-bolt locks, only non-smokers in the household, electronic payments, and a good credit rating. Electronic payments require less labor to process,so many companies charge more if you mail yours. The other items are risk management issues. A non-smoking household is much less likely to have a fire.

Before you sign up for a specific policy,sit down with your insurance agent and see what other premium discounts might apply to your situation. You could save yourself a bunch of cash.

Document Your Property

Make a list of all your belongings, with photos, before you get your policy. It would be an even better idea to make a video. Store your list or video in a private location online or in a safe deposit box at your bank. Keeping the video in the video camera won't help you much if the camera gets stolen or destroyed in a fire. The same goes for a list on your computer.

Becoming a renter instead of a homeowner doesn't mean you no longer need insurance. Your possessions still need to be insured and you still have potential liabilities. Because of this, renter's insurance makes sense. It brings you a lot of peace of mind for only a little money!