A. What hasn’t my agent told me about renters coverage? For the most part, your agent has no doubt been honest with you; at least, about the product his or her company offers. For example, if that particular company offers only Actual Cash Value Insurance, then you may not even be told about Replacement Cost Insurance. Instead, your agent will focus on ACV insurance, and suggest riders the company also offers to increase your coverage (and your premium). By educating yourself about the types of renters insurance available the terms used in the industry, you’ll know to ask about things such as discounts for safety equipment in your home or liability limits.
B. Do I need renters coverage? Many renters, especially young adults out on their own for the first time, believe renters coverage is an unnecessary expense. Insurance isn’t just for those who own expensive electronics, fancy furs or top of the line furniture. Most people undervalue their possessions; while you knew what a favorite sweater or pair of jeans cost when you purchased them, it’s easy to forget the price because they’ve become part of you. Even if you don’t have the sort of things a thief might want, insurance will cover you if there’s a fire, windstorm, or a liability issue.
C. Is renters coverage expensive? Most insurance policies range in price from $150 to $400 annually. That may sound like a lot to come up with all at once, but you can nearly always make arrangements to pay semi-annually, quarterly or even monthly. For less than the price of a cup of coffee a day, renters policies offers not only peace of mind, but a solid plan for recovering in the event of a disaster, robbery, lawsuit or identity theft. In addition to all these things, many policies also pay some motel and other costs in the event your rental becomes uninhabitable, either temporarily or permanently.
D. How does renters coverage work? When you purchase an insurance policy, you’ve purchased a service that both you and the insurers hope you’ll never actually need. Because the chances are minimal, insurance companies are able to collect small premium payments to insure up to $35,000 worth of belongs and $100,000 in liability from a large number of renters, and make a profit. Most of these policies will never be paid out, and many will never have even a single claim. When a claim is made, the company reviews the specifics of the policy and the claim then issues a check to cover what the deductible doesn’t.
E. How do I qualify for insurance coverage? Qualifying for insurance is as easy as completing an application. The application will ask for the size of the rental, the number of rooms (excluding basement and baths), the number and type of safety measures in the home, the presence of certain breeds of dog, whether you’ve had claims in the past few years, and a few other questions. It’s possible to be turned down for insurance if your pit bulls have caused a series of claims in the past or if you’ve been arrested for making fraudulent claims, for most people, qualifying for insurance isn’t difficult.
F. How do I determine how much insurance I need? How much insurance you need is determined by a combination of things. First, of course, is the value of your belongings. There’s no point in over- insuring; regardless of the dollar amount, the policy will only pay up to the value of your items. D0 you prefer maximum insurance at a pricier cost, or insurance that will require you to come out of pocket to the tune of several thousand dollars, but at minimal cost? Remember that art, furs, antiques and some other things may require additional riders to be covered.
G. What is the minimum for renters coverage? Most companies issuing insurance will not sell a policy for less than $10,000; in some parts of the country, the minimum amount is $20,000. This is because going below this amount is not cost- effective for the company. Writing a policy takes the same length of time, whether it’s for $10,000 or $35,000 or more. Tracking paperwork, reviewing policies and other business expenses are much more cost- effective with policies for greater amounts.
H. Does renters coverage have to be with the same company as my other insurance? There might be advantages to placing your renters coverage policy with a company that covers your car, business, life and health. For one thing, you’re likely to receive a discount. For another, you’d be working with an agent with whom you already have a relationship. However, don’t automatically assume the best deal will be with your current insurers. While they may offer it, unless it’s something they specialize in, it’s entirely possible you could find a less expensive policy elsewhere.
I. What questions will my agent ask me when I call? The agent will need to know the physical address of the rental, as well as the year it was built and whether it is an apartment, a condo, a duplex, a single family residence, a mobile home or another type of dwelling. The proximity of the nearest fire hydrant, as well as any equipment in the home that will make it safer will also be asked. Be sure the agent knows if the home contains a burglar alarm, the number of smoke/ fire alarms, a sprinkler system, a fire extinguisher, or other devices that offer protection. You’ll be asked if the rental includes a pool or trampoline, as well as the type of personal belongings you own.
J. What do insurance ratings systems mean and how can I find out how my insurance company is rated? Companies that issue renters, homeowners, life and health insurance are rated by three major groups. A.M.Best, Standard and Poor’s and Moody’s all offer highly respected credit ratings so that consumers can be assured they will be well- covered. Among other things, these ratings reflect the insurance company’s financial stability so that consumers can be assured that in the event of a claim, the company will be able to pay it. A.M. Best considers companies with A++ and A+ ratings to be Superior, while companies with A, and A- are Excellent, and those with B++ and B+ are considered Good.