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Home Insurance Advice

Buying a home is one of the single largest investments that most people ever make. If you need to protect that investment, your main line of defense is homeowners insurance. Most standard homeowners insurance policies will provide coverage for damage to your home (and many of the items in your home) caused by:

Theft

Fire and Lightning

Smoke

Broken Pipes

Ice and Snow

Homeowners insurance also provides coverage for liability claims, medical payments to third parties, and legal costs if a lawsuit is brought against you. The most common amount of liability coverage included in a homeowners policy is $100,000, but you may need much more, depending on your circumstances.

What will not be cover by the insurance?

Is very important that you read the homeowners insurance policy to find out exactly what is and is not covered. Always do this before you suffer a loss, so you won't be surprised. Most insurance companies exclude damages caused by an act of war, nuclear accident, terrorism, earthquake, and flood, although you may be able to purchase special policies or endorsements that will cover these other events. Most homeowners insurance policies limit coverage for certain high-priced or hard-to-replace items. However, additional endorsements or floaters will be necessary to protect items like expensive jewelry, furs, antiques, and other valuables. You will need to have each item appraised individually.

How much should you pay?

All mortgage lenders require that borrowers get a minimum amount of homeowners insurance (usually equal to the appraised value or the purchase price of the property). But this is not necessary the amount you really need. Instead, do some research and find out how much it would cost to rebuild your property, then consider insuring it for that amount. Are you willing to pay extra by having damaged personal property replaced? If so, consider purchasing replacement cost coverage with your homeowners insurance. When it comes to valuing your property, insurers generally use one of two methods. The first, actual cash value, pays an amount equal to the replacement value of the property, minus depreciation for the years you owned the property. The second, replacement cost, is more expensive, but it pays you the full value of the item today, so that you can replace the old property with a new one.

How deep are your pockets?

To save money, consider choosing a deductible of $250, $500, or even $1,000. In the event of a loss (e.g., water damage from a leaky roof), you'll be required to pay this amount out of your own pocket before your homeowners insurance takes over, but in the meantime, you'll save on premium charges. Don't forget to tell your insurer if you have a home security system (e.g., fire, burglar, emergency). Most insurers offer discounts for such safety features. You may also qualify for a lower insurance premium if you live near a fire department or hydrant, own a newer home, own a home built out of fire-resistant materials, or get your auto insurance from the same company.

Shop around

Get quotes from several insurance companies when shopping for homeowners insurance. But remember, the lowest price does not always equal the best deal. Compare the coverage each policy offers, and check with your state's department of insurance to make sure that each company you're evaluating has a good reputation in the industry.

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You return home to your apartment to discover a water pipe has burst and your computer is sitting in two inches of water. You go away for the weekend and come home to find your home has been burglarized. You have a party and one of your guests slips in the kitchen and breaks her leg. The building you live in burns down, taking all your worldly possessions with it.

These are scenarios none of us wish to contemplate, but they may happen at any time. How can you protect yourself if your home entertainment system is stolen, your best friend breaks her leg helping you hang curtains, or everything you own is lost in a fire?

Two words: renters insurance. Like homeowners insurance, renters insurance will protect all your personal possessions from loss and protect you from huge legal and medical bills should someone be injured in your apartment.

My landlord's insurance covers me. Not true. This is a common misconception among renters, and it is untrue in almost all situations. Your landlord carries insurance that will cover his loss in a situation where the building is destroyed or damaged in some way. Your landlord is covered in case someone (including a tenant) is injured on the property, though not in your apartment.

Renters insurance is expensive. Not true. The average renter can get complete coverage for a couple hundred dollars or less a year, depending on where he or she lives. This is a small price to pay for knowing that you and your belongings are protected, isn't it?

My roommate has insurance, I don't need it. Not true. Your roommmate's insurance will cover her possessions, but it will not cover yours unless you are listed on her policy. It is possible (and even encouraged) for roommates to get a single policy to cover all inhabitants and possessions in the apartment.

How do I get renters insurance? It's easy. If you have a car, talk to the agent who does your car insurance. If you don't, start with your friends. Ask them who their insurance agent is. Or head for the yellow pages. There is also this list of insurance companies who offer renters insurance, though they don't have coverage in all areas. Shop around for the best rates and coverage for you.

On page two we will look at what kinds of coverage you can get so you will know what to ask for when speaking to the agent.

Thinks to Consider When Purchasing Insurance

A basic renters insurance policy will cover you in case your belongings are lost due to burglary, fire, burst water pipes and the like. It will also provide liability coverage should someone be injured on your property. Another thing renters insurance will cover is damage you cause to the landlord's property (say, if one of your party guests breaks a window). Here are some questions you will need to consider before speaking to an agent about getting insurance.

Replacement Cost vs. Actual Value
A basic policy usually provides for the actual cash value of your belongings. This means that a 3-year-old computer would be covered for its initial cost minus depreciation. A computer may well have almost fully depreciated after 3 years, so you would receive little or no cash for it.

If you have expensive electronics or other pricey items which are subject to depreciation, you might want to consider replacement cost coverage instead. In this case, you would be reimbursed for the complete current cost of buying a new computer or stereo. Of course, replacement cost coverage is more expensive, but may be worth it in many cases.

Deductibles
Like any insurance policy, renters insurance will have deductibles. This is the amount of loss you will have to cover out of pocket before receiving any money from the insurance company. For example, if your deductible is $350 and your computer (on which you've got replacement cost coverage) would cost $2000 to replace, you would receive $1650 if it were stolen. The higher the deductible, the lower the premium, but you must balance your ability to cover the deductible with the monthly premium savings.

Endorsements
Like homeowners insurance, renters insurance usually won't cover you for "acts of God" such as floods and earthquakes. You can get endorsements for these, however, and you should seriously consider them. Endorsements can also be used to extend the amount of coverage on the policy or the incidents which are covered.

Loss of Use Coverage
If something happens that means you can't live in your apartment for a period of time, you may have to live in a hotel and eat meals out. Your renters insurance can and should cover such "loss of use" just as your auto insurance covers a rental car while yours is in the shop.

Liability
Your basic renters insurance will include liability coverage should someone be injured in your apartment. As with car insurance, there is a per-incident limit on this coverage, and you should make sure this is high enough. Increasing liability coverage will often not increase premiums much at all.

Floaters for Special Items
If you have such items as valuable jewelry, antiques, furs, or other big-ticket items, they often will not be completely covered under a basic policy. To fully cover these items from loss, you will want what is called a floater. These are essentially separate policies covering only these items and can be very inexpensive relative to the replacement cost of the items. This brings us to an important thing to consider when purchasing insurance: the household inventory.

Inventory
Before heading out to shop for renters insurance, take a look around. Inventory the possessions you would most want or need replaced were they to be lost as well as any big-ticket items for which you may need special coverage. This could include your stereo and/or computer equipment, antiques, jewelry, furs, appliances, or photography equipment. Gather details of make, model, serial number, age and costs (both purchase and current replacement) and put them in a spreadsheet or just write them down in one place. It may also help to have photos of these items for identification purposes.

Appraisals
If you do have such things as antiques, jewelry, furs, or other items not easily replaced but highly valuable, it may even be a good idea to have an insurance appraisal done so you can be sure to have the coverage you need as well as the paperwork you will need to collect should they be lost. The appraisal can be done by an expert in the field (jewelers, furriers, and the like) and will usually include a photo of the item and the expert's description and appraisal of value. These appraisals, as well as a complete inventory of the items in your property, should be kept somewhere outside your apartment or at least in a fire proof safe. Often, you will be able to place copies of such paperwork with your insurance agent.

Now that you've considered these items, it's time to head out and look for the best policy for you.

WHY DO I NEED IT

On page two we will look at what kinds of coverage you can get so you will know what to ask for when speaking to the agent.

How to Buy Renter's Insurance
If you're renting, your landlord's insurance does not cover your household goods in case of loss. Here's how to protect your possessions.



	Steps:
1.	Locate insurance companies that offer renter's insurance by consulting the yellow pages of your phone directory or an Internet search engine.

2.	Contact insurance agents and ask about the terms of standard renter's insurance policies; find out if you need extra protection to insure valuables such as jewelry, art or collectibles.

3.	Provide selected insurance companies with your address, along with a brief description and estimated value of your household goods.

4.	Obtain estimates from selected insurance companies for renter's insurance that will provide coverage for your personal property against theft, fire and wind damage; personal liability for accidents of others on your premises; damage to property of others in your care; and living expenses if you're forced to vacate the premises during disasters or repairs.

5.	Consider buying a "replacement value" policy that will reimburse you for the actual cost of replacing your goods (instead of a depreciated value on used goods) in case of loss.

6.	Compare quotes and coverage levels from different insurance companies and purchase the policy that best suits your needs and budget.


	Tips:
	Most renter's insurance policies include personal liability insurance as a standard feature.


	Warnings:
	Premium rates can vary considerably, depending on the age and location of your rental unit, the crime rate in your area and other factors.

Thinks to Consider When Purchasing Insurance

How to Buy Renter's Insurance