Handout 1 Renters Insurance Who, me? Why would I need renters insurance? As you wade through the boxes in your bedroom packing for college, look around at each of the things that you value. Whether it's the stereo that you inherited from your dad, or the computer that your grandmother gave you for graduation, it is important to realize that these things are not cheap, nor easy to replace. What would you do if your aromatherapy candle melted your answering machine? Would renters insurance cover the damage? The Ohio Insurance Institute has developed this program to teach you how to protect your belongings with renters insurance, and to help you understand the types of unfortunate events renters insurance may cover. It's difficult to imagine how many "things" you've accumulated over the years - until you make the move to an apartment. You may be surprised at how much money you've invested in the contents of your apartment - like clothing, computers, stereos, furnishings and sports equipment. Even those jeans that you wear only on weekends have value. Replacing all of your belongings at once would be an enormous blow to your wallet! I mean you don't want to have to spend all of your pizza money on socks and t-shirts, right? Insurance is a means of protecting and softening the economic impact of such a loss. Insurance gives you peace of mind that protects your belongings from certain losses. Of course, you pay a price for this service, known as a premium. Some insurance protects possessions - like renters insurance - and some insurance protects people - that's liability coverage. Don't underestimate the importance of liability coverage. It is just as important for a renter as it is for a homeowner. It provides protection if someone is injured by you or a family member or pet on or off the property. Insurance is a way for many people to share the losses of a few. You pay a relatively small payment, known as a premium, in exchange for promises to pay for certain losses that may occur. Premiums, which are paid by you and others, are combined to pay for these losses. Because of this sharing of premiums, no one person has to suffer the whole loss. Of course, there are differences in the value of belongings, depending upon their age, condition and value. This is considered in the event of a covered loss. Insurance coverage is selected on the basis of the policyholder's needs. A renter is primarily interested in protecting the contents of his or her apartment, and protecting against liability for causing damage or injury to another person or their property. A person with valuable electronic equipment - like stereos and computers - or jewelry,
collector's items or similar valuable items may wish to purchase additional protection not found in a standard renters policy. There are some exceptions to what insurance may cover. Most renters policies exclude certain perils such as earthquake, landslide, flood, sewer backup, war and nuclear radiation. The reason why most insurance companies do not cover these situations is because these things happen to too many people at the same time. Adding a special endorsement to your policy and paying an additional premium can cover some of these excluded perils. For example, if you live in an area prone to flooding, you might want to pay an extra premium in order to protect against the damage caused by flood water. You should check with your insurance company to see what additional causes of loss you may need to add to your policy. Mopeds, motorized bicycles and other recreational vehicles more than likely are excluded from coverage under the renters policy. Be sure to check with your agent or company regarding coverage if this is a concern for you. Legal responsibility for the transmission of communicable diseases is excluded. No, we're not kidding. The renters policy also excludes home daycare businesses. Whether you're at a store, ordering from a catalog, or shopping online you love to shop. You enjoy - no, you love to - brag when you get a great bargain on a pair of jeans, right? Why not take time to shop for insurance? You might end up saving a few bucks and even find better coverage and service options. Here are some questions and answers that should guide you through your insurance shopping adventure. How do I shop for insurance? Check out several insurance companies, agencies, and websites for the basics. Consider evaluating coverages, costs, claims handling and services provided. In order to compare "apples to apples," be sure to provide the same information to each source for consistency same apartment location, same limits for coverage amounts, same endorsement options and deductibles, etc. Don't forget to ask about a company's financial rating, also. What questions should I ask when shopping? Probably the most important question to ask is "What's not covered or what are the limitations under this renters insurance policy?" This assures you that the limited and excluded coverages will be explained to you. Insurance companies usually offer ways for you to increase the limited and excluded coverages by adding endorsements to the
policy. And, yes, you'll need to pay for these endorsements, but at least you'll understand what won't be covered. The decision to buy endorsements is yours. What would be the "normal" coverage limits on a renters insurance policy? Typical coverage for your belongings (contents) would start out in the $10,000-15,000 range, increasing from there. Most insurers would offer liability coverage limits beginning at a $100,000 limit with the option to increase. The lowest medical payments coverage option would be $1,000 again, this limit could be increased for an additional premium. What about deductibles? By raising your policy's deductible, you're responsible for smaller losses, not your insurer, thus lowering your premium and chances for frequent claims. The higher the deductible you choose, the more you'll save on insurance costs. Remember: a deductible means you pay this amount before the insurance coverage kicks in. Deductibles usually start out at $100 and can increase to $1,000 or more. Is renters insurance expensive? Frankly, it's a bargain in Ohio! A national study, comparing the average cost of renters insurance for each state and Washington, DC, showed Ohio ranked 15th lowest. Ohio's average renters insurance premium was $132, that's $37 lower than the national average of $169. Wondering how much renters insurance might cost? What can I do to help keep the cost of my renters insurance down? By preventing losses and claims, you can help keep the cost of insurance down. How, you ask? Keep fire extinguishers in fire-prone areas like the kitchen, laundry and garage. Be sure to have smoke detectors in your apartment - especially in the kitchen and bedroom hallways. A good rule of thumb is a minimum of one smoke detector on each floor. Discourage crime by leaving outside lights on at night. And, when you'll be gone, use timers on inside lights and radios to give the appearance that someone is at home. Be sure the landlord keeps your property safe. Inform him when repairs are necessary (loose railings, steps or walkways). Always lock doors and windows when leaving. Keep expensive items like stereos, computers, video games, DVD and VCRs out of direct view of windows. No need to entice a thief to break in.
Be sure to ask about available discounts. Companies offer a variety of insurance discounts so be sure to ask what types are available. If you insure your apartment and car with the same company, you may be eligible for a discount right off the bat! Companies that provide insurance for your apartment, auto, life and/or health may offer multiple policy discounts of 5-15%. Also, if your apartment has a security system installed, be sure to notify the insurance company. Most insurers offer discounts depending on the type of the installed security system. Which endorsements should I consider adding to my renters policy? Without a doubt, one of the first to seriously consider is the guaranteed replacement cost coverage endorsement. Although it costs more, you're better off if faced with a major loss. A replacement cost policy pays to replace your damaged property regardless of the age and condition. Other endorsements that you should ask about would be the scheduled property endorsement. This could increase the limited value and perils insured against for certain items like jewelry and collections (baseball cards, stamps, etc.). Anything I can do now so I'm prepared if a loss occurs? Sure. The best advice is to keep good records. Keep original sales receipts for big-ticket items and be sure to keep a list of the serial numbers. For specialty items like jewelry, be sure to have appraisals prepared. It's a good idea to borrow a video camera and tape each room in the apartment, narrating the purchase dates, costs, serial numbers and other pertinent info as you go. Don't forget to open dresser drawers and closets, too. You can't begin to imagine how much all your clothes would cost if you needed to replace them all. Most insurance companies will provide you with a brochure so you can take an inventory of your belongings. Be sure to keep this inventory, along with receipts, photos and the videotape, off site in a safe deposit box. This may sound like a painful "exercise" now, but you'll realize the benefits once you have a claim. If I file a claim, do I need to worry about the cost of my insurance increasing, or even worse, having my policy canceled? Although there's no set answer here, most insurers won't "ding" you due to a claim that's beyond your control. However, that's not to say that if you have repeated theft losses from multiple break-ins that your insurance company won't ask you to increase your deductible or find insurance coverage elsewhere. Plus, if you continue to have multiple losses on the same type of claim, you might want to consider searching for another apartment.
What should I expect if I do file a claim - is there a "typical" claims process? Once a loss occurs, you need to notify your insurance company or agent as soon as possible. When you make a claim, you'll need to follow certain procedures, complete forms and file reports. These duties are specified in your insurance policy. You'll be asked to provide the following information: Your name and the name on your policy Your home address The renters insurance policy number Date, time, and location of loss The type of loss (fire, theft, etc.) Extent of damage What property or person, if a liability claim is damaged. Whether you can still reside at the apartment or not (is it too damaged to stay there?) If personal property has been damaged or is missing, you may be required to show proof of ownership (dated sales receipts, an itemized inventory, photographs and/or recorded video segments showing the property) It's your responsibility to contact your insurer as soon as possible after a loss. In return, the insurance company will explain its claims procedures and how to go about filing a claim. Your insurance company may ask you to fill out some forms and provide details of the loss. This shows you why it's important to keep good records of your purchases. Next, your company will arrange for you to talk with a claims representative. This person will probably want to meet with you, more than likely at your apartment. Sometimes initial interviews are held over the phone. You may be asked if your conversations can be tape recorded as a way to document the loss. http://www.ohioinsurance.org/renters_insurance/introductionset.htm
Handout 2 Should you purchase a Renters Insurance Policy for your new apartment? Imagine yourself a year or two from now. You ve just moved into a new apartment and recently purchased new furniture, a stereo and a TV. Stop and think - what happens if you come home one evening to discover you ve been burglarized? Or, what happens to you if someone is hurt while on your property? Could you pay their medical bills? Or, in case you live with your parents, how would you replace your belongings if their home and everything in it was destroyed by fire? How do you recover from any of these losses? Renters/homeowners insurance should be a consideration to provide protection for your possessions and your legal responsibilities to others. Renters/homeowners insurance covers your home and personal property (contents), and also provides liability protection. Renters insurance does not provide coverage to the building itself because you don t own the building. Like other types of insurance, renters/homeowners insurance is available with deductibles. By agreeing to pay for small losses, you keep your insurance costs down. Remember, you choose the amounts of insurance coverage and these would be the limits for each type of loss. The contents portion of your policy covers your personal property such as furniture, clothes, appliances, stereos and other valuables. You are protected not only in case of theft but also from damage to your property by fire, lightning, wind, hail, vandalism, smoke damage and other causes of loss. Your insurance policy may not cover everything you own. There may be limits on certain items such as money, jewelry, guns or furs. To obtain additional protection for these things, investigate the availability of scheduled property endorsements with your insurance representative. For an additional premium, you can cover these special items at their appraised value. Liability insurance protects you from claims or judgments made against you by others injured while on your property. It also provides protection for any injuries caused by you or your family on or off the premises. In addition, it covers damage to others property, the cost of defending you in court due to a lawsuit, and it pays the injured person s medical bills regardless of fault. Unlike most homeowners policies, the renters insurance policy does not cover structures such as the apartment building and garages. Since you do not own the building, this coverage is unnecessary. However, you still might be held responsible for damage to the building, so you need to make sure that you carry adequate liability limits.
Additional Living Expenses and Loss of Use If your home or apartment becomes uninhabitable due to an insured loss, the policy provides coverage for above-normal expenses (like room and board) up to a stated amount. This loss of use coverage is standard in both renters and homeowners policies. When shopping for any type of insurance, ask the insurance agent or representative what s not covered by the policy. All policies contain exclusions and it s best to find out ahead of time what will not be covered in the event of a loss. Oftentimes, coverage can be bought back through an endorsement to the policy. Endorsements are options that can be added to your policy which modify or extend the coverage outlined in the basic policy. An additional premium is normally associated with each endorsement. If you have a loss covered by the policy, there are two ways your claim can be settled. One is through the actual cash value (ACV) method. ACV is based on the principle that over time, items lose some of their value and are not worth as much as when they were new. For example, a sofa you purchased five years ago probably would be worth much less if you tried to sell it today. If damaged, the depreciated settlement is normally used when you ve suffered a loss of personal property. Another way your claim can be settled is through replacement cost. This coverage often applies to the house itself, as long as the owner maintains adequate insurance coverage. Many companies now offer replacement cost coverage for your personal property too. You can add the replacement cost endorsement to your policy for an additional premium. Using the same example, the damaged sofa could be repaired or replaced at today s prices. This means that you can replace or repair your damaged sofa without any type of depreciation. When a loss occurs, it is your responsibility to report the loss to the insurance agent or company in a timely manner. It is the company s duty to assign a claims adjuster to evaluate the loss and work with you to determine fair compensation for the loss. Insurance policies state that the insurance company will repair or replace the damaged property, based on the magnitude of the loss and the policy limits you selected. Before you move into your first apartment 1. Check with your insurance agent about the following: policy exclusions (what s not covered and what has limited coverage), any endorsements you should consider (like replacement cost coverage on your possessions) or available discounts (for multi policy or apartment security systems).
2. Consider increasing your insurance deductible. The higher the deductible you select, the less you pay in premiums. 3. Make sure the policy limits are enough to cover all the property that moves in with you. A good way to determine adequate coverage is to prepare an itemized list of all items in your apartment furniture, clothes, and electronic and other equipment which will force you to think about all the things you own and how much it would cost to replace them. 4. Consider videotaping or photographing all your belongings. In the event of a claim, this will help you recall all your possessions and help serve as proof that you had these items in your apartment at the time of the loss. Be sure to keep the video or pictures off premises, perhaps in a safe deposit box. 5. Shop around to compare rates, services and claims procedures of several insurance companies and agents. 6. Protect your property and premises from losses. Some tips: remember to lock apartment doors and windows when leaving; don t invite crime by leaving expensive items in direct view of open windows; use timers on lights and radios to give the apartment that lived-in look when you re away.