Did you know that renters insurance can provide you liability protection? Most people who consider buying renters insurance do it for the protection of their personal belongings (cloths, furniture, etc.) but don't know about the other things their policies include. Many people have no idea that their comprehensive renters policy may often include personal liability, which in many cases can have a $100,000 limit or higher! Just because you may not own the place doesn’t mean that something can’t go wrong leaving you liable.
Also if you are thinking your belongings aren’t worth anything, start to add the cost of the cloths in your closet and drawers alone. Start looking around your home at your belongings like it's an episode of “The Price is Right” and I think you will be surprised at how much value you have built up over the years. You still may be thinking the cost of any policy would easily outweigh the value of its coverage, but do you know just how inexpensive a renter’s policy can be? With many companies offering prices as low as $10-15 per month, you might end up kicking yourself in the event you don't purchase one and end up needing it down the road(That’s less than half a dollar a day!)…
Insurance is tricky, and what one company’s policy may include, another company’s may exclude. Just about every policy has some sort of exclusion or limitation which can really sneak up for an unpleasant surprise when your least expecting it. For example, imagine that you just got back from BestBuy with your new flat-screen HDTV. You get it setup and turned on just in time for the game that evening. As you’re watching your new TV inside your home, there’s a storm brewing outside. “CRACK”, down comes a bolt of lightning and there goes your brand new TV. If you have renters insurance you may be feeling pretty good about the situation right now, but how are you going to feel when you call your company to find out that you have a per item dollar limit on your electronics (like many different personal property items)? This is why you need an agent that can help you sort through the clutter of a policy. Before you just trade your money for a piece of paper labeled “Your Policy”, talk to your agent about your coverage. Ask questions regarding policy limitations and exclusions to avoid being left shocked and confused when you need your coverage most!
This is why having a good agent is so important. When shopping for insurance make sure to find an agent that is willing to answer all your questions. Maybe even more importantly, find an agent who is willing to ask you all the right questions to ensure you are covered correctly.
Replacement Value Vs.
Actual Cash Value
If you know what depreciation means than the difference between Replacement Cost and Actual Cash Valuations may be pretty easy. However, for those who aren’t too familiar with the term “depreciation here’s some assistance:
Depreciation means that a specific object’s value is reduced over time, particularly due to wear and tear or usage of said object. So basically, this means that an item gets less expensive as it gets older (typically, all else equal). In example let’s take a 2005 Ford Mustang. Think of that 2005 Mustangs price when it was at the dealership back in 2005, and let’s say it's wearing a price tag of $30,000. Now Fast forward to today. Outside of special circumstances (upgrades, enhancements, etc.), you would be hard pressed to find someone pay that price for that same vehicle today. This is because the price of the vehicle has “depreciated”.
So how does this apply to Replacement Cost vs Actual Cash Value?
Here’s an easy way to remember how:
Replacement Cost = Non-Depreciated Value
Actual Cash Value = Depreciated Value
The calculation for a covered claim using Actual Cash Valuation will usually result in a check that will cover “some” of the cost to repair your home. The same covered claim using Replacement Cost Valuation could mean that you receive a check that will cover most or all of the cost to repair (or possibly replace) your home.
Fortunately most homeowners insurance policies cover homes in Florida at replacement cost, but this is not always the case and varies from one policy form to another. Also you may not have known that your policy may cover your home at replacement cost but your personal property at actual cash value. Make sure you check that you have Replacement Cost included. If you don't, check if it's an available option.
Questions to ask include:
- Is my home covered at replacement cost or actual cash value?
- Are my personal belongings covered at replacement cost or actual cash value?
You may know that many companies exclude (or limit) water damage coverage limits for older homes, but did you know that water damage contributes to some of the largest residential claims in Florida. To put it in perspective, water damage claims have been greater in recent years than fire and hurricane claims combined! Whether you are new to Florida or born and raised in our wonderful state you may know that there is a lot of water here. But do you know if you are covered for “all” forms of water damage? You may not have thought into this before but there are numerous ways water can cause damage to your home, and headaches for homeowners like yourself if you are not prepared.
Water Damage claims can come from many different places. Possible damage can arise from multiple water sources including but not limited to utility water pipes (outside and under), pipes within your walls, and pipes within neighboring properties (upstairs or next-door neighbor). Before buying a home owners policy you need to be informed on the different hazards your home faces, and know whether you are covered if one shows it ugly face. If not, you could find yourself in a bad situation where you end up paying much or all of it out of your own pocket.
Questions to ask include:
- Does my homeowner’s policy cover me for Flood?
- Is my condo covered if my upstairs neighbor’s bath overflows and leaks into my unit?
- Is my water damage coverage limited?
- Does my water damage coverage only cover me for issues arising from my plumbing?
- Is my home covered for water backup and sump overflow?
- Will my company automatically exclude (or limit) my water damage if my home becomes too old?
Personal Property & Contents Coverage
Did you know that a standard homeowner’s policy may cover most the furniture (couches, armoire, bed, dining table, etc.) in your house, but your wife’s wedding ring may not be? Now you can usually fix this by scheduling that wedding ring, but the point is many things are not automatically covered by your homeowner’s insurance policy. If they are covered you still need to be aware of which of your personal belongings may be capped, as almost all companies have a per item cap (electronics, jewelry, fine art, firearms, etc.). Scheduling these items is usually the only way to make sure some of these items are covered under your homeowner’s policy
If you have high value items and want to ensure you are covered for them you these are a few questions to ask when obtaining quotes:
- Which of my personal belongings are considered personal property?
- What items may have set limits that are capped under my personal property coverage?
- Are these possessions covered while they are away from my insured property?
- Is my personal property covered at Replacement Cost or Actual Cash Value? (This can be a big difference in price for some companies, make sure you check)
Did you know that your renters insurance can provide you liability protection? Many people are unaware of this very important part of their renter’s insurance policy. If you have this and aren’t excited in the least about it then think about this for a second.
Imagine you have some friends and family over at your home. One of your friends is heading up the stairs to use the restroom and catches their foot as they near the top of the staircase. They do a quick tumble down the stairs. Besides just breaking up the friendly game night, they have also broken their arm too. Even though this person may be your friend, what if they don't have health insurance? They may be forced to turn to you to seek help with fixing their broken arm, but if you refuse then they may be able to seek legal action against you. This is where you will be happy you had your liability coverage, something you may not have really cared much for before an incident like this.
There have been an estimated 358,300 residential fires per year over the last several years according to the NFPA. If you have a standard renter’s insurance policy, fortunately you may already be covered in the event your home adds to this list. You never know when a fire could strike, so below we have listed a few tips that may help avoid one in your home.
- Make sure your smoke detectors are working and test every month. (Don’t forget to change the batteries!)
- Inspect wiring and electrical panels in your home regularly. (May want to contact landlord)
- Keep flammable material away from stove or other cooking equipment.
- Avoid aluminum wiring (most insurance companies won’t accept this any ways)
- Avoid using space heaters. (also something most companies do not accept)
- Never leave home while cooking.
Renters Insurance Discounts
Did you know that getting a wind mitigation report can drastically cut down the cost of your homeowner insurance policy? You may be smart to contact the owner of your property (or association manager if it's a condo) to see if one of these reports is available to you, as it can help reduce the price of your renters insurance policy. This valuable report’s primary purpose is to “mitigate” the portion of your premium derived from the risk of windstorm or hurricane damage. Don’t leave your hard earned cash on the table when purchasing a renters insurance policy by not looking for one of these reports. Keep in mind that if you have to provide your own this may not work as the cost of the policy in some cases is almost the cost of the report.
There are tons of other discounts that can be acquired, some of which you may already be eligible for and didn’t even know it! Below is a list of some possible discounts you should be asking about when obtaining insurance quotes for your home.
- Do I get a discount for my alarm system? (monitored or local)
- Do I get a discount for being in a secured community? (gated, guarded, single access, passcode)
- Was my home built by a preferred builder? (usually only new construction)
- Am I getting credit for my hurricane shutters and doors?
Did you know that most homeowner’s insurance policies include a separate deductible for hurricane? This separate deducible in many cases is much higher than your other peril deductible. Depending on your tolerance for risk, some people may prefer to save money on their premiums and accept a higher deductible. Some people don't want to come out of pockets thousands of dollars after a hurricane wreaks havoc on their home. Where ever amongst those people you are, make sure you are aware of how much you would have to come up with if a hurricane causes damage to your home.
Questions to ask include:
- Am I covered if a hurricane causes damage to my personal property?
- How much is my separate hurricane deductible?
- Is my home covered by a storm that is not a tropical storm or hurricane?