Wednesday, September 9, 2015

What is renters insurance

What is renters insurance? – What does it involve? Find out!

One may wonder – what is renter insurance? Renters insurance is a kind of property insurance which offers a policy holder with coverage for belongings and liability within the confines of a rental property.  It actually relates to individuals that are renting or subletting an apartment, sole family house, duplex, studio, condo, town-home or loft and protects against losses to the personal property of the tenant within the leased property.  It further protects against losses brought about by liability claims like injuthe renter’s but the owner’s policy that will apply.  In the absence of this coverage, the tenant will have to bear this loss out-of-pocket.
It follows that it is important for anyories happening on the premises that are not a result of a structural problem with the property.  Here, it is not ne renting a home or apartment to have renters insurance.  Whereas several types of damages are taken care of by the insurance policy of the property owner, the renter is required to insure other items. Majority of main insurance companies provide varied types of insurance, and each one of them provides different level coverage.

Contents:The principal purpose

What is renter insurance? It is principally designed to offer coverage for a tenant’s personal stuff such as furniture, electronics, jewellery and other stuff that may be damaged or lost. It is the responsibility of the tenants to provide the estimate value of what is contained in their apartments to ensure that they buy sufficient insurance to replace them. Thus, a tenant with more valuable possessions will definitely require more renters’ insurance and will also have to pay extra money for a policy.

Types of policies

The most widespread homeowner’s insurance policy for renters is HO-4.  Insurers normally use the HO designation for all kinds of rental or home insurance and this includes HO-6 for condo owners and other varieties of home owners’ insurance.  HO-4 is specifically designed for renters and covers damage or loss to contents of a rental unit arising out of common causes.  These are electrical surges, lightning, falling objects, riots, vandalism, theft, volcanic eruptions and fire among others.

Other policies

HO-4 and the standard renter’s policies of insurance companies normally exclude two vital damage causes - flood and earthquake – which pose bigger threats in certain areas. This means that renters may have to buy an extra policy for cover in case a flood or an earthquake occurs.  The value of renter’s belongings and the degree of risk – the type of structure the rental unit is in and location are what determine the rates for these policies.

ACV versus Replacement Cost

Renters need to be fully aware of the insurance covers offered by these companies.  There are two options: the actual amount of cash and costs for replacement.  Replacement cost denotes the actual cost of the item at the time it was bought new and gives a renter adequate money to buy a replacement.  On the other hand, actual cash value calculates depreciation and insures items for less value as they age.  The manner in which the insurer allocates value to the items may greatly affect a policy’s price and the amount that it will pay out in case a claim will be raised. Thus after going through this you will be able to get the answer to - what is renter insurance?

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