Renters don’t need the level of insurance protection that homeowners need. However, if you rent a house or apartment, you want to cover your valuable belongings and protect yourself against legal liability stemming from an accident in your home.
The average annual renters insurance premium is around $188, according to The Zebra, an organization that researches the insurance industry. That’s cheap, especially compared to the expense of replacing your personal property if a fire or storm causes major damage.
Whether you live in a home filled with valuable family heirlooms or a starter apartment with a couple of roommates, purchasing renters insurance makes good financial sense. Buying cheap renters insurance online is easy. You just need to know how to calculate the amount of coverage you need and ways to get a great rate.
How much coverage do you need?
Determining the amount of coverage you need isn’t difficult. Begin by taking an inventory of your personal belongings. Start in one room, then move from room to room until you’ve recorded everything in your home. Inventory all your personal property, including appliances, artwork, clothing, electronics, furniture, kitchen utensils and rugs, and determine their current value and replacement cost.
There are several ways to go about taking inventory. You can make a written inventory, which should include detailed descriptions of each item, along with serial numbers when applicable. Written inventories should also include pictures of each item. Some people use video cameras to inventory their homes, zooming in to capture details and adding voice descriptions.
Mobile apps are perhaps the easiest way to create a home inventory. Mobile apps, available for Android and Apple devices, make inventory taking easy, enabling you to take photos with your device’s built-in camera and add pertinent text information. Some apps even include barcode and QR code functionality, enabling you to print and attach a scannable code to items.
Apps also make it easy to update your inventory at any time, because you can delete items you’ve gotten rid of and add new things as you make purchases. Even after you’ve purchased a renters policy, retain your home inventory, in case you need to file a claim later.
After completing your inventory, add up the value and replacement cost of your personal belongings to determine how much coverage you need. If you have $15,000 worth of belongings, you will need at least $15,000 in renters insurance coverage.
Keep in mind that insurance companies set limits on claims for certain types of property. For example, a company may only pay up to $1,500 for jewelry and only cover theft, not damage. Other items that likely face claims limits include business property, collectibles, electronics, firearms and silverware.
Cash value vs. replacement cost coverage
When you file a renters insurance claim for personal property losses, the insurance provider will pay the actual cash value of the items or their replacement cost. In a cash value scenario, the insurance company will factor in depreciation of each item at the time of the claim, along with your policy’s deductible.
For example, if someone steals your two-year-old laptop computer, which you purchased new for $1,000, the insurance company may only give you $300 to replace it, based on its current value. On the other hand, a policy that offers replacement cost protection would pay the amount of money required to purchase an equivalent computer at today’s price.
Typically, standard renters insurance policies offer cash value coverage. However, most insurance companies offer replacement cost coverage for a slightly higher rate, usually around 10% more. So, if your policy costs $14 per month, you could increase your protection to replacement cost coverage for just $1.40 more. That’s a good deal.
Shopping for the cheapest renters insurance online
Always get quotes from several insurance companies before taking out a policy. You can get renters insurance quotes by requesting quotes online at company websites.
Always shop for renters insurance using an apples to apples comparison. For instance, if you get a quote for $20,000 in personal property coverage and $100,000 in liability coverage, request quotes for the same coverage levels from other companies.
When shopping for cheap renters insurance, don’t base your decision entirely on premium rates. Ask questions to learn about a company’s claims process and coverage details. For example, you need to know about claims limits on items such as electronics or jewelry. Also inquire about exclusions. Does the policy cover damage caused by drain or sewer backups? Does the policy cover a vacant apartment if you go on a months-long vacation or military deployment? If a standard policy does not offer enough protection for your property or does not provide coverage for certain types of perils, you may consider taking out a rider or endorsement.
Get insurance company and agent recommendations from friends and family members to narrow your search. When you find a great renters insurance rate, check the company’s financial rating on the AM Best website and its customer service track record on the Better Business Bureau webpage. Also, make sure the company holds a valid license in your state by using the insurance company lookup tool on the National Association of Insurance Commissioners website.
J.D. Power, a market research company, produces an annual study of renters insurance companies. Using a five-star rating system, J.D. Power ranks renters insurance companies based on factors such as claims handling, customer interaction, billing process and price. The J.D. Power study is a great source of information for narrowing down the list of companies from which you request quotes.
How to lower your renters insurance premium
Although renters insurance is inexpensive in most places, you can lower your premium by raising your deductible. For instance, you may choose to increase a $500 deductible to $1,000. Keep in mind, raising your deductible will increase the amount you must pay out of pocket if you need to file a claim.
To keep a low deductible and reduce your rate, ask your agent about discounts. Insurance agents offer loads of discounts for new and existing policyholders.
Allstate discount programs include:
- Multi-policy discounts for customers who also purchase Allstate auto insurance.
- Up to a 15% discount for houses and apartments equipped with burglar or fire alarms.
- Up to a 25% discount for retirees 55 years of age and older.
Likewise, Liberty Mutual offers several great discounts for renters, including:
- Military discounts for active duty, reserve and retired military members.
- Early shopper discounts up to 45% for new customers who get a quote from Liberty Mutual before their current policies expire.
- Smart home discounts for dwellings equipped with smart home devices such as thermostats and security systems.
- Preferred payment discounts for customers who pay automatically using a checking account.
Discounts often vary by state, so check with an agent to find out which programs are available in your area.
Renters insurance is a valuable investment in case anything happens to your belongings or apartment, but you don’t have to spend a fortune on it if you shop around and look for discounts online, and choose coverage that meets your needs without exceeding them.
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