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!
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