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Basics Of Renters Insurance


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The basics of renter's insurance and terms

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Basics Of Renters Insurance

  1. 1. Basics of Renters Insurance
  2. 2. <ul><li>A survey conducted by the Independent Insurance Agents and Brokers of America found that nearly two-thirds of renters do not have renters insurance </li></ul><ul><li>Renters insurance is relatively inexpensive to own </li></ul>
  3. 3. <ul><li>Your landlord or association may have insurance, but it only protects their building </li></ul><ul><li>Your belongings are not covered under their policy </li></ul><ul><li>Renters insurance protects individuals who live in a house, mobile home, condominium, or apartment that is owned by another person </li></ul>
  4. 4. Items covered under a policy <ul><li>Fire/Lightning </li></ul><ul><li>Windstorm/Hail </li></ul><ul><li>Explosion </li></ul><ul><li>Riot </li></ul><ul><li>Damage caused by aircraft/vehicles </li></ul><ul><li>Smoke </li></ul><ul><li>Vandalism </li></ul><ul><li>Theft </li></ul><ul><li>Volcanic eruption </li></ul><ul><li>Falling objects </li></ul><ul><li>Weight of snow, ice, sleet </li></ul><ul><li>Accidental damage from plumbing, heating, air conditioning, sprinkler system, appliance (includes freezing) </li></ul><ul><li>Floods and earthquakes are not covered under standard policies </li></ul>
  5. 5. <ul><li>Most policies cover the behavior of household pets </li></ul><ul><li>Renter is liable for events they cause or which occur within their home </li></ul><ul><li>Some events which are caused by a landlord’s negligence may be covered by their insurance instead of renters </li></ul>
  6. 6. Actual Cash Value vs. Replacement Cost <ul><li>Actual Cash Value (ACV) coverage pays only what your property was worth at the time it was damaged or stolen </li></ul><ul><li>Replacement Cost coverage will pay what it actually costs to replace item(s) lost – minus any deductible. </li></ul><ul><li>You pay more for this coverage </li></ul>
  7. 7. Take Inventory <ul><li>To ensure compensation lost or stolen, inventory all personal belongings </li></ul><ul><li>List each item, value, and serial number </li></ul><ul><li>Photograph or videotape each room/building/garage </li></ul><ul><li>Keep receipts for major items </li></ul>
  8. 8. <ul><li>Renters insurance will cover “additional living expenses” if rental unit becomes uninhabitable due to disaster ( paying for you to live somewhere else ) </li></ul>
  9. 9. <ul><li>Liability protection is standard with most policies </li></ul><ul><li>If someone slips and falls by your unit, you are covered for any costs up to your liability limit. </li></ul>
  10. 10. Ways to reduce premiums . . . <ul><li>Increase your deductible </li></ul><ul><li>Discount for “protective devices” (smoke/fire detectors, burglar alarms, fire extinguishers) </li></ul><ul><li>Discounts for those age 55 and retired </li></ul><ul><li>Discounts if you buy both auto and renters policies </li></ul><ul><li> (multi-line discounts) </li></ul>
  11. 11. Value of typical single-person household <ul><li>Furniture $8,000 </li></ul><ul><li>TV, VCR, stereo, tapes, CDs $2,000 </li></ul><ul><li>Computer $1,500 </li></ul><ul><li>Microwave $ 120 </li></ul><ul><li>Misc. appliances $ 240 </li></ul><ul><li>Clothing $3,000 </li></ul><ul><li>Photos, paintings, etc $ 800 </li></ul><ul><li>China, glassware, silverware $ 600 </li></ul><ul><li>Sports equipment $ 600 </li></ul><ul><li>Cameras, etc $ 800 </li></ul><ul><li>Books $ 700 </li></ul><ul><li>Jewelry $1,000 </li></ul><ul><li>Misc. $4,000 </li></ul><ul><li>Total: $23,360 </li></ul>
  12. 12. Scenario <ul><li>John has the following renter insurance policy: </li></ul><ul><li>$250 deductible </li></ul><ul><li>$30,000Person Property Limit </li></ul><ul><li>$2,500 Special Limit for certain property </li></ul><ul><li>$100,000 Liability </li></ul><ul><li>John moved out of the dorms into an apartment with his friends, Chris and Randy. After talking to an insurance producer, John decided to carry renter insurance on his stuff. He gave the agent the following list of items to be covered: </li></ul><ul><li>Clothes - $8,000 * Coffee table - $100 </li></ul><ul><li>Textbooks - $2,000 * Lamps 3@$2each=$75 </li></ul><ul><li>Couch - $150 * Bed - $200 </li></ul>
  13. 13. <ul><li>Chris and Randy owned the $900 TV, $2,000 stereo, and $3,000 computer along with their beds, books and clothes, but they decided that they did not need insurance. </li></ul><ul><li>While on break from school, Chris had a grease fire in the kitchen, and everything was lost. </li></ul><ul><li>How much did John pay? </li></ul><ul><li>$10,525 (everything he had covered) </li></ul><ul><li> $2,000 (textbooks only) </li></ul><ul><li>$ 250 (deductible only) </li></ul>
  14. 14. <ul><li>$250 </li></ul><ul><li>(his deductible) </li></ul>
  15. 15. <ul><li>How much did Chris and Randy pay? </li></ul><ul><li>Nothing, insurance covered everything </li></ul><ul><li>They had no insurance, so had to pay for whatever they wanted replaced. </li></ul><ul><li>$250 (deductible) </li></ul>
  16. 16. <ul><li>They had no insurance, so </li></ul><ul><li>whatever they wanted replaced </li></ul><ul><li>would be at their expense. </li></ul>
  17. 17. <ul><li>How much did the insurance company pay? </li></ul><ul><li>$250 (deductible) </li></ul><ul><li>$10,525 (enough to cover John’s stuff) </li></ul><ul><li>$16,425 (enough to cover John’s stuff and </li></ul><ul><li>the TV, stereo, and computer) </li></ul>
  18. 18. <ul><li> $10,525 </li></ul><ul><li>(enough to cover John’s stuff) </li></ul>
  19. 19. Terms to Know <ul><li>Deductible – amount of a claim you pay before the company pays anything </li></ul><ul><li>Actual Cash Value – current value of an item in terms of cash </li></ul><ul><li>Replacement Cost – cost of item as if replaced new </li></ul><ul><li>Depreciation – decrease in value of property </li></ul>
  20. 20. Terms - continued <ul><li>Rent – payment in exchange for occupying another’s property </li></ul><ul><li>Security Deposit – money paid in advance of moving into another’s property </li></ul><ul><li>Amenities – items that make a property more attractive in comfort or convenience (swimming pool, health club, park, etc) </li></ul>
  21. 21. Terms - continued <ul><li>Tenant – person that rents and occupies another’s property </li></ul><ul><li>Lease agreement - contract between owner of property and renter who will have temporary occupancy of property </li></ul><ul><li>Utilities – basic services of electricity, gas, or water </li></ul>
  22. 22. Terms - continued <ul><li>Rental agreement – a contract between a landlord and tenant that provides for occupancy for a short period of time, such as one month; automatically renews at the end of this period, unless the landlord or tenant give each other the proper amount of notice to terminate the contract. </li></ul><ul><li>Rent – an agreed upon sum paid at fixed intervals by a tenant to the landlord for possession and use of property </li></ul>
  23. 23. Works Cited <ul><li> </li></ul><ul><li>Ohio Insurance Institute </li></ul><ul><li>DIFP (Dept. of Insurance, Financial Institutions, </li></ul><ul><li>and Professional Registration) </li></ul>