Renters insurance policies are typically very affordable, and especially when discounts can be applied to the policy for safety and security features or for bundling with other insurance coverages, but it is important to understand the basics in order to help ensure that you will receive its perceived value in the event of a loss.
Here are 5 tips to remember that may help you better understand renters insurance policies and claims.
1. Be Sure to Purchase a Renters Insurance Policy that Protects Your Personal Property along with Your Potential Liability.
- Many landlords require their renters to purchase at least $100,000 in Liability Protection, but beware that minimal liability policies often do not cover the cleaning, repair, or replacement of the renter’s personal contents and can give a false sense of security.
- HO4 / HO-4 insurance policies protect renters from a loss to their personal property due to a number of broad named perils such as fire and smoke damage, water damage from broken plumbing pipes or fixtures, theft, and more, but damage due to natural disasters such as groundwater flooding or earthquakes may be excluded and require additional coverage.
- Be sure to consult with your insurance agent and understand your coverage along with its exclusions.
2. Understand the Difference Between Actual Cash Value (ACV) and Replacement Cost (RCV) Insurance Policies.
- RCV Policies fully cover the cost to clean or repair damaged property to its pre-loss condition if possible, or provide a sufficient allowance in today’s dollars to replace the damaged property with like kind and quality.
- ACV Policies will also pay to clean, repair, or replace damaged property, but depreciation will be calculated and then deducted from the value.
3. Additional Living Expenses (ALE) Coverage Pays For Temporary Housing, Meals, etc. Due to a Claim.
- ALE Coverage may also pay for increased utility bills in cases such as plumbing breaks that lose excessive amounts of water and would require additional electricity usage for drying equipment.
4. Inventory Valuables, Save Receipts, and Take Photos of Your Personal Property to Help Document any Potential Insurance Claim.
- Backup files online using cloud storage if possible or in an email to yourself.
5. After a Loss, Hire a Professional Contents Restoration Company to Create an Inventory of Salvageable and Non-Salvageable Items, Remove Soot, Repair Water Damage, Clean, and Deodorize Belongings.
- Ask for references and check on them.
- Ask about their insurance and storage facility.
- Have them share the claims process with you and address any questions.
- Be sure to account for valuables such as cash, jewelry, guns, ammo, and prescription drugs with the project manager or owner before they begin working on the project.
VIDEO: Insurance 101 – Renters Insurance | CentralInsurance
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