What Is Rental Insurance?
Although most homeowners purchase insurance to cover their belongings in event of theft, fire or other catastrophes, many renters do not realize they can do the same. Renters insurance also can be bought to protect one's possessions.
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Function
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Many apartment-dwellers wrongly believe that if their residences are damaged or their belongings are stolen that the owners of their building will reimburse them for their losses. This is not the case. Although the apartment building itself is probably insured for losses, the tenants' belongings are rarely covered in those instances. That is why finding an independent insurance policy, particularly if you own a lot of things or have some expensive possessions, is worth considering.
Types
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The basic renters insurance policy is known as HO-4 in the industry. This policy covers these types of losses: fire or lightning; windstorm or hail; explosion; riot or civil commotion; damages caused by aircraft or vehicles; smoke; vandalism; theft; volcanic eruption; falling objects; weight of ice, snow or sleet; accidental discharge or overflow of water or steam, including a water sprinkler system; and electrical surge protection. Earthquake or flood damages are rarely covered under basic polices and usually require additional coverage.
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Considerations
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Buying a policy is based on several factors, starting with the value of your possessions. Take an inventory, list and photograph your belongings and put this information on a disc in a safe place that's not in your apartment where it could suffer the same fate if something happened to your home. Consider leaving the information at work or with friends and family. Next decide what deductible you want. The lower the deductible, say $500, the higher the policy's premium than if you chose a $1,000 deductible. These are the amounts that will be deducted from your insurance payout in case of a loss. Finally, you will have to decide on either an actual case value or replacement cost. The basic policy usually is the actual case value, which is the property's value at the time of its loss. Replacement means that the company will pay the actual cost of a new item, such as a TV at its current value.
Liability
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Many renters insurance polices also offer liability coverage, meaning that if you should have guests over and someone is injured, you are covered for many of their potential costs. If this is something you are interested in, be sure to make sure the policy you buy has liability coverage.
Companies
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Most of the major insurance companies, including State Farm and Allstate, as well as online firms such as Esurance offer rental insurance at varying price plans.
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