Posted: 23 Sep 2009 05:00 AM PDT
This post is from GRS staff writer April Dykman.
On 02 August 2005, my friend Frank and his partner awoke at 2:45 a.m. to the dog barking and a neighbor knocking on their door. The apartment complex was on fire. They grabbed their dog and whatever they could carry and ran from the building.
"We lost everything," he says. Later they'd find out that it was arson. A former employee of the apartment complex stole rent checks and set the office on fire. Frank was moving into a new apartment in ten days, and the new complex agreed to let them move in early. "We moved in with a plastic bag of groceries, paid for with a $50 food voucher from the Red Cross," he says. The other 70 displaced tenants stayed in Red Cross shelters.
To make matters worse, Frank didn't have renters insurance. "We didn't think we'd ever need it," he says. "You don't see why you should pay this extra bill until you're in a situation where you need it." They had to start over from scratch.
Why renters skip the insurance
There are ways to lower the cost of coverage, including raising your deductible (make sure you can afford it, though) and having protective devices such as smoke detectors, extinguishers, and security alarms. Some insurance companies offer discounts to senior citizens. Also look for a multi-line discount, which is a discount for buying more than one type of policy from the same company (e.g., renters insurance and auto insurance).
I suspect that the main reason most people don't have a policy, though, is that they don't understand how renters insurance works, or why they need it.
Renters insurance 101
Other named perils covered sound like scenes from Die Hard (explosion, riot, damage caused by air crafts and falling objects), but I suppose you never know when German radical activists might terrorize your Christmas party.
Renters insurance also includes liability protection, which covers medical expenses for a person injured on your property and legal defense, if necessary. Additionally, if your apartment or condo becomes uninhabitable due to a named peril, your coverage will pay for somewhere to live in the meantime.
What is not covered: If you live an an area prone to floods, earthquakes, or hurricanes, you may need to purchase a rider, or separate policy. Also, if you have valuables that would exceed your policy limit, such as expensive jewelry or antiques, you'll need a rider to recover the full loss.
Buying a policy
Take inventory. This seems to be the step that most of us dread, but it's where we should start. (Confession: I haven't done it yet. It's been languishing on my to-do list for almost a year now, but I'm going to make it a top priority.) If you lost everything, it'd be awful to have to recall every item you owned and it's value. Better to document it. Here's the plan of action:
There also are software programs that walk you through the process. The Insurance Information Institute provides free inventory software that helps you complete a room-by-room inventory.
Prepare. Write down a set of questions you want to ask your potential insurance providers. Some suggestions include:
Shop around. To find the right provider and policy, consider the following:
Updating your policy
It's easier than you might think to find an affordable renters policy with good coverage, and it's time and money well-spent. As my friend Frank says, "It's the cheapest bill you'll have. For very little money, we could have replaced everything we lost."
If you are a renter, do you have renters insurance? If not, is there a reason you don't have it?
Photo by DVS.
|You are subscribed to email updates from Get Rich Slowly |
To stop receiving these emails, you may unsubscribe now.
|Email delivery powered by Google|
|Google Inc., 20 West Kinzie, Chicago IL USA 60610|