Tuesday, September 20, 2011

Tante Yunita Bandung

How Much Renters Insurance Do I Need?

If you get a renters insurance policy you will probably need to select a limit for personal property, and for liability coverage. If you are not sure what limits to select it is best to consult with an experienced insurance agent. With that said there are some general things to consider for a home or apartment renters policy.

For personal property coverage some policy's provide actual cash valuation (ACV) and others offer replacement cost. If you select an ACV policy you will be considering what the depreciated value of your property is. For a replacement cost policy (suggested), you would consider what the cost would be to buy all new contents at retail prices.

Some people elect to only get enough coverage for their high value property such as computers and big screen TV's. Burglary is the main concern for some and typically a burglar does not take your pots, pans, shoes, cleaning supplies, and other common household goods. This may be true but common goods are at risk for fire or windstorm damage. In my area of Houston Texas many renters lost all of their contents from hurricane IKE damage.

My suggestion would be to select a replacement cost policy and then calculate what it would cost to replace all your contents. You could start with your clothes. You can go to the mall and get a small bag of clothes for $100. How much larger is your complete collection of clothes compared to that small bag? Then add the value of your furniture, electronics, appliances, cooking items, pictures, and other items. Be sure to ask your agent about coverage for special items you own like firearms, jewelry, coin or stamp collections, antiques, or musical instruments.

After you have an estimate of what you want to insure I suggest adding more for a cushion. For example if you estimate your personal property to have a value of $25,000, you could select a limit of $30,000. That could cover small items you forgot to include. Remember that most people tend to accumulate more property every year. Then you could forget to call your agent to request a higher limit. So start a little high on the limit.

The liability limit is easier to select. Many apartments will require that you have a minimum of $50,000 or $100,000 in liability coverage. It is very inexpensive to increase this limit. For example it might only cost $10 per year to increase from the minimum to $250,000.

Of course the cost of a policy is an important consideration. However renters insurance is usually inexpensive. As an example, in the Houston TX area, a basic renters policy might cost around $12 per month. An upgraded policy with 25K in personal property, 250K liability, and the replacement cost option could be about $30 per month. Inland areas with low windstorm risk could be even lower. If you ever have a claim you will probably be glad you got the right coverage, and not just the least expensive option!

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