CID: Young Singles: Home Insurance

How to Purchase Insurance > Home 101: Renters Insurance - Really?

Skip to Homeowner's Insurance Considerations for All Life Stages

Special Considerations for Young Singles

  • At this stage of your life, you’re more likely to be a renter. So you should seriously consider renter’s insurance. However, make sure you understand what’s covered and what’s not covered by your policy. Don’t rely on the landlord’s insurance, or your parents insurance. As someone living independently, you need to protect yourself and your belongings.
  • In maintaining your own residence, you must realize that you are liable for things that happen on your premises. For example, you might be using your apartment for parties. Keep in mind that in many states, you could be held legally responsible for the actions of anyone who drinks in your home and then has an accident in your house or after leaving it. Your homeowner’s or renter’s policy should protect you against lawsuits due to these types of liability issues.
  • You might be sharing your apartment with roommates who are unrelated to you. In such a case, insurance coverage can become complicated because renter’s insurance is designed for single individuals and traditional families. Be sure that you have an individual policy of your own to cover you and your possessions.
  • If you are in the military, speak with your insurance agent about whether personal items that you take with you during your deployment will be covered if they are lost, stolen or damaged. Homeowner’s insurance typically covers personal property that you take with you while traveling, but most policies exclude coverage for damage caused directly or indirectly by war. In addition, most homeowner’s policies require you to occupy the residence insured. If you are deployed, call your insurance carrier and state insurance department to discuss any possible coverage issues.

At this stage of your life, you are no doubt mindful of your expense budget. Some prudent steps can help you control your home insurance costs, as well as lessen the likelihood of damages occurring in the first place.

  • Investing in a few smoke detectors and fire extinguishers, and strategically placing them around your home – particularly in the kitchen and bedrooms – is a smart practice that can pay off big time. Not just in lower insurance premiums, but in providing real life-saving protection to you and everyone else you invite into your home.

Considerations for All Life Stages

Whether you are a homeowner or renter, home insurance offers important protection.

  • For homeowners, insurance protects your home’s physical structure, as well as your personal property.
  • In contrast, renter's insurance only protects your personal property. Never assume that the landlord’s insurance covers you or your belongings. Landlord’s insurance only protects the building.

Both homeowners and renters may need protection against liability for accidents that injure other people or damage their property.

Let’s be more specific about homeowners insurance and the different types of protection it can provide:

  • Damage to House. Covers damages to the house itself up to the face amount of the policy. For example, if the face amount is $100,000, that’s the most you will receive if your house is totally destroyed, less any deductible.
  • Other Structures. Covers damage to other structures or buildings, such as a detached garage, work shed or fencing.
  • Personal Property. Covers damage to – or loss of – personal property. Personal property includes household contents and other belongings used, owned or worn by you and your family. Be aware that certain personal property items like jewelry, antiques and artwork may need special added coverage.
  • Additional Living Expenses. Covers the necessary living expenses, up to the stated limit, incurred by the insured to continue, as nearly as possible, the normal standard of living when the house cannot be occupied due to a covered loss.
  • Comprehensive Personal Liability. Protects you against claims arising from accidents to others on property that you own or rent. With a few exceptions, such as auto or boating accidents, it is an all-purpose liability coverage that follows you wherever you go.
  • Medical Expenses. Covers medical expenses, but is limited to an amount per person and per accident for injuries occurring on your premises to persons other than an insured. It also may cover medical expenses away from your premises if caused by you, a member of your family or your pets.

You have the option to insure your home and belongings for either replacement cost or actual cash value.

Actual cash value is the amount it would take to repair or replace damage to your home after depreciation.

Replacement cost is the amount it would take to replace or rebuild your home or repair damages with materials of similar kind and quality, without deducting for depreciation. A good rule of thumb is to insure your home for at least 80 percent of its replacement value, recognizing that in most instances, the value of the land doesn’t need to be included.

Be aware that coverage for damage caused by flooding is NOT included in your homeowners policy. If you live in an area prone to flooding from any cause – for example, hurricanes, rivers or streams – be sure to inquire about purchasing flood insurance, which is available through the federal government’s National Flood Insurance Program (NFIP).

Here’s an important tip: It’s a good idea to make an inventory of all of your personal property, along with a photograph or video of each room. Also, save your receipts for major items and keep them in a safe place away from your house or apartment. That will make it easier if you ever need to file a claim.

Your home insurance premiums are affected by a number of factors, for example:

  • Your home’s specific characteristics are important…
    • Its age; older homes typically cost more to insure.
    • Its type of structure; for example, brick, frame, stone or synthetic siding
    • Its wiring
    • Its roof
    • Whether it has a garage
  • Your home’s location also has an impact on your premiums. For example…
    • Its proximity to a fire station
    • Its exposure to extreme weather – hurricanes, tornados or earthquakes
    • Whether it’s in a neighborhood that’s more prone to theft than others
  • Protective devices can also make a difference. For example…
    • Burglar alarm systems
    • Smoke detectors
    • Fire extinguishers
    • Sprinkler systems
    • Dead bolt locks

Having these items throughout your home definitely helps lower your premiums. And, of course, they also greatly help reduce potential damage and injuries.

  • There are some personal characteristics that affect insurance premiums:
    • Non-smokers might pay less for homeowners insurance than smokers.
    • And remember, it’s important to maintain a good credit history because many insurance companies consider credit history when determining how much to charge you for insurance.
  • Your previous claim history has a big impact on your premiums. Consider not putting in claims for smaller amounts/events to avoid being tagged for a premium increase. You may want to consider a higher deductible if you are unlikely to file a claim for a loss that is less than $500 or even $1000.

Content Last Modified on 2/2/2008 10:45:16 AM