Renters Insurance

Renters Insurance

Renters Insurance, sometimes called a Tenants Policy, covers your personal property, such as clothing, furniture and electronics in case of perils like fire, theft or wind damage from a hurricane. It may also provide liability coverage, medical coverage, and temporary living expenses.

Even though you don’t own the building, it’s still your stuff, and you might be surprised with how it adds up. Your landlord’s insurance usually covers only their building and property.  Landlords policies rarely cover anything of yours. Renters insurance covers your furniture, clothes, pots and pans, and most of the items you need to live.   Basic jewelry and electronics are usually covered.  Check with your insurance carrier if you have pricy items or large collections.

Liability insurance can help pay if a guest is injured in your home and sues you for damages.  A serious injury can bring a very large suit.  Liability insurance can also offer coverage for non-automobile accidents caused by you and your family.

Living expense coverage pays all or part of the cost of a place to live if your home becomes unlivable.

My local area has had two major apartment fires in the past few months. In both cases, a fire started at one end of the building and destroyed everything…if it didn’t burn, it was soaked with water. Residents lost everything, including their place to live.

Prices are moderate and just like any other type of homeowners insurance, premium costs depend on many factors like where you live, your deductible, your insurance company, and whether you need any additional coverage.

Flood Insurance

NFIP National Flood Insurance program is run by the federal government and available in addition to your standard property insurance. It covers only flood damage and is available in communities that participate in the National Flood Insurance Program.

Floods cause a lot of damage.  There are very few small claims as just a few inches can result in tens of thousands of dollars.  Floors, wallboard, insulation, and wiring need to be ripped out and replaced.  It is reported that the annual damage from floods exceeds the damage from fires.

Picture showing flooded houses
A good reason to buy flood insurance

Depending on where you live, you may be required to buy and maintain flood insurance as a condition of your mortgage loan. It’s available through most insurance brokers or from direct insurers. More information is available at 1-888-RAIN924 (1-888-724-6924) or at www.floodsmart.gov.

Flood insurance covers the type of water damage that occurs when the water level in your neighborhood rises and water flows in.  It doesn’t cover other water damage like leaks or if your roof blows off and rain comes in.  It also won’t cover basements,  crawl spaces, or any areas below the ground level.  Your standard homeowners insurance might cover those situations.

Flood Insurance Rates and Flood Plains

Topographic maps are used to determine flood plains or areas that are prone to flooding.  If your home is in one of these areas, you should consider flood insurance.  Many mortgage providers, especially if they are government backed like FHA and VA will require it.  These maps are updated every few years.  Rates are based on many factors including your construction type, relative risk, value, and local government programs.

There is a quick search tool available at floodsmart.gov that will rate your risk and give a ballpark estimate of cost.  Exact rates usually require an inspection.  Like homeowners insurance, you will probably have a choice between purchasing Actual Cash Value insurance (paying for the depreciated value of the loss) or Replacement Cash Value insurance (paying for the replacement cost).

Some people confuse flood insurance with disaster relief.  Flood insurance is reimbursement for your loss based on insurance principles, disaster relief is a federal loan program based on political whim.

Homeowners Insurance and Dogs

Homeowners Insurance and Dogs

Homeowners insurance and dogs don’t always get along.  Policies typically cover dog bite liability, a risk that insurance companies try to avoid. Some charge more for certain breeds and others will charge more (or cancel coverage) for dogs with a history of biting.

According to the Centers for Disease Control and Prevention, these are the breeds with the greatest frequency of bites:

  • Pit Bull
  • Rottweiler
  • German Shepherd Dog
  • Husky
  • Malamute
  • Doberman Pinscher
  • Chow Chow
  • Great Dane
  • Saint Bernard

Many insurance companies also blacklist:

  • Siberian Huskies
  • Crane Corsos
  • Mastiffs
  • Wolf hybrids
  • Akitas
  • Presa Casario

These are the most likely breeds to be on an exclusion list.  Insurance companies argue that their lists come from experience and actuarial tables.  Some states have restricted the use of dog breed blacklists.  I suppose, if you own one of the blacklisted breeds, you wouldn’t want it to interfere with your insurance rates, but the flip side is that if all breeds are allowed, all policy holders need to share the cost of the added risks.

Insurance companies argue that there are some 40 million plus households in the US with dogs and 4 1/2 million people are bitten each year.  One in 5 of these requires medical attention and the average dog bite claim is $29,000.That comes out to $470 million a year.

Of course the dog owners argue that their Fifi wouldn’t bite anyone!

It’s not just dogs that insurers don’t like.  If you own an exotic pet like an ape or an alligator, or an unusual domestic pet like a potbellied pig check with your insurance company.

Homeowners Insurance Coverage

What Does Homeowners Insurance Cover?

What does homeowners insurance cover and do for you?  Homeowners insurance covers your home and possessions against most common but not all risks. There are several levels of coverage that vary by state.  Homeowners policies usually don’t cover damage caused by lack of maintenance, hurricanes, earthquakes, landslides, pollution or war, although additional policies or riders may cover these.

Policies generally include:

  • Structure insurance that will pay to rebuild your home if it’s damaged by covered evens.  Outbuildings and garages are usually covered also.
  • Personal belonging coverage that will pay to replace all or part of any belongings that are damaged.
  • Liability protection if you are sued.
  • And additional living expenses if your home is damaged and you need to live somewhere else while it is repaired.

Homeowners insurance is generally available in different levels of coverage:

  • Actual Cash Value pays to replace your home or possessions minus a deduction for depreciation. So your sofa that was purchased for $300 in 1995 might not be worth much after depreciation.
  • Replacement Cost coverage pays to replace your sofa with a new similar sofa, so your sofa that was purchased in 1995 for $300 might be covered for $450 now. Of course, replacement cost coverage costs more.

Most mortgage companies will require you to purchase homeowners insurance for at least the amount of the mortgage and name them as also insured beneficiaries.  They may purchase insurance if yours lapses.  You don’t want to do this because the insurance that they purchase will probably be overpriced, the costs are passed on to you, and the insurance covers only their interests.

Increasing your deductible might save you a bit on your premium. Say that your current coverage includes a $250 deductible. If you increase that deductible to $1,000, you might save 20 to 30 percent on your premiums.

Pay close attention to your policies limits. During the application process, your insurance company will determine a replacement value and insured amount. Most companies are honest with this, but some companies may use invalid figures. Try to avoid purchasing either too much or too little insurance. Remember that you’re dealing with construction costs which can vary greatly, but there’s no sense in insuring your home for more than similar houses sell for. On the other hand, if you don’t insure your home for enough, you’ll only receive the insured amount.