Renters Insurance Checklist

If you rent a house or apartment, your landlord’s insurance will only cover the costs of repairing the building if there is a fire or other disaster. You need your own coverage, known as renters or tenants insurance in order to financially protect yourself and your belongings.

 

Renters insurance includes three important types of financial protection:

• Coverage for Personal Possessions
• Liability Protection
• Additional Living Expenses 

The following checklist can help you choose the right coverage when you are shopping around for renters insurance or speaking with an insurance agent or company representative.

1. Coverage for Personal Possessions

1. How much insurance should I buy? Make sure you have enough insurance to replace all of your personal possessions in the event of a burglary, fire or other covered disaster.The easiest way to determine the value of all your personal possessions—including furniture, clothing, electronics, appliances, kitchen utensils and even linens—is to create a home inventory. This is a detailed list of all of your personal possessions along with their estimated value. An up-to-date home inventory will also make filing an insurance claim faster and easier.
   The Insurance Information Institute offers free Web-based home inventory software, available at www.knowyourstuff.org.
2. Should I get replacement cost or actual cash value coverage?
   An actual cash value policy pays to replace your possessions minus a deduction for depreciation whereas a replacement cost policy will pay the cost of replacing your possessions without accounting for depreciation. The price of replacement cost coverage is about 10 percent more but can be well worth the extra expense as the value of most items tends to depreciate quickly.
3. What disasters are—and are not—covered?
   Renters insurance covers you against losses from fire or smoke, lightning, vandalism, theft, explosion, windstorm and certain types of water damage (such as when the tenant upstairs leaves the water running in the bathtub and floods out your apartment or a burst pipe). Most renters insurance policies, however, do not cover floods. Flood coverage is available from the federal government’s National Flood Insurance Program (888-379-9531, www.floodsmart.gov) and from a few private insurers. You can get this coverage from the same agent or company representative who sold you the renters insurance policy. Earthquakes are not covered either. You can either get a separate policy or have it added as an “endorsement” to your renters policy, depending on where you live.
4. What is my deductible, and how does it work?
   A deductible is an amount of money you pay out-of-pocket before the insurance coverage kicks in. Deductibles are available as a specified dollar amount, typically $500, $1000 or $2000, though higher deductibles are available. The larger the deductible, the lower the premium charged for the same amount of coverage, so if you can afford a deductible of at least $1,000, you may get as much as 25 percent off your premium. Remember though, that you will be responsible for paying the deductible each time you file a claim.
5. What is a “floater” and do I need one?
   If you have expensive jewelry, furs, sports or musical equipment, or collectibles, consider adding a floater to your policy. Most standard renters policies offer only a limited dollar amount for such items; a floater is a separate policy that provides additional insurance for your valuables and covers them if they are accidentally lost. You will need to present receipts and/or appraisals for the items covered by the floater. It is important that expensive items be appraised properly as you will pay a premium based on the appraised value and in the event of a claim, be compensated for this dollar amount. You can ask your insurer to recommend a reputable appraiser. For some items, like laptop computers, a stand-alone policy may also be an option. Check your renters policy first to see whether your laptop is covered and what the deductible is. 

2. Liability Protection

1. Do I have enough liability insurance in the event someone sues me?
   Renters insurance provides liability protection that covers you against lawsuits for bodily injury or property damage done by you, your family members and even your pets. This coverage pays for both the cost of defending you in court and court awards—up to the limit of your policy. Most standard renters insurance policies will generally provide at least $100,000 of liability coverage, but additional amounts are available. Consider whether the amount of liability coverage provided by your policy is sufficient to protect your assets.
   Did you know you also have no-fault medical coverage as part of the liability protection provided by your renters policy? This coverage is only for injuries sustained by others and is not a substitute for your own health insurance. Medical payments coverage allows someone who gets injured on your property to simply submit his or her medical bills directly to your insurance company so the bills can be paid without resorting to a lawsuit. Most policies include about $1,000 to $5,000 worth of this coverage.
2. Do I need an umbrella liability policy?
   If you need a large amount of liability protection, you can purchase a personal umbrella liability policy. An umbrella policy kicks in when you reach the limit on the underlying liability coverage provided by your renters or auto policy. It will also cover you for things such as libel and slander. For about $150 to $300 per year, you can buy a $1 million personal umbrella liability policy. The next million will cost about $75 and $50 for every million after that. Because the personal umbrella policy goes into effect after the underlying coverage is exhausted, there are certain limits that usually must be met in order to purchase this coverage. Most insurers will want you to have about $250,000 of liability insurance on your auto policy and $300,000 of liability insurance on your renters policy before selling you an umbrella liability policy for $1 million of additional coverage.  

3. Additional Living Expenses

1. If I can’t live in my home after a disaster, will I be covered?  If your home is destroyed by a disaster that your policy covers and you need to live elsewhere, renters insurance provides additional living expenses (ALE). ALE pays for hotel bills, temporary rentals, restaurant meals and other expenses you incur while your home is being repaired or rebuilt. It is important to know out how much coverage you have, and what the limits are. Some companies provide coverage for a set amount of time, while others have a financial cap.

4. Other Coverages

1. I run a business out of my home; do I need supplemental coverage?A typical homeowners or renters policy provides only $2,500 coverage for business equipment which is generally not enough to replace all of the equipment required by even a small home business. You may also need coverage for liability and lost income. Insurance companies differ considerably in the types of business coverages they offer. Some may meet the specific needs of your business, while others may not. So it is wise to shop around for coverage options as well as price.
2. Am I covered if I am traveling or away from home?Most renters polices include what is called off-premises coverage. This means that belongings that are outside of your home are covered against the same disasters listed in your policy. For example, property stolen from your car would be covered. However some companies may limit the amount of off-premises theft to 10 percent of the amount of personal possessions insurance. If you think you need additional off-premises theft coverage—for example if you travel a lot—shop around for a policy that has the insurance protection you need.  

5. Discounts

Insurance companies often offer discounts on renters insurance if you have another policy with them for your car or business. You can also get discounts if you:

• Have a security system
• Use smoke detectors
• Use deadbolt locks
• Have good credit
• Have multiple policies
• Stay with the same insurer
• Are over 55 years old 

Companies offer several types of discounts, but these can vary widely by company and by state, so review your options carefully. Also, some employers and professional associations administer group insurance programs that may offer a better deal than you can get elsewhere

For more information please visit: Insurance Information Institute

Prevent Dog Bites—And a Lawsuit; Average Cost of Dog Bite Claims Is On the Rise

Dog bites accounted for more than one-third of all homeowners insurance liability claim dollars paid out in 2011, costing nearly $479 million, according to the Insurance Information Institute (I.I.I.).State Farm Mutual Automobile Insurance Company, the largest writer of homeowners insurance in the U.S., paid out more than $109 million as a result of its nearly 3,800 dog bite claims in 2011.

An analysis of homeowners insurance data by the I.I.I. found that the average cost paid out for dog bite claims was $29,396 in 2011, up 12.3 percent from $26,166 in 2010. In fact, from 2003 to 2011, the cost of the average dog bite claim increased by 53.4 percent. The number of claims rose 3.3 percent from 15,770 in 2010 to 16,292 in 2011. These increases can be attributed to increased medical costs as well as the size of settlements, judgments and jury awards given to plaintiffs, which have risen well above the rate of inflation in recent years, according to the I.I.I. 

Dog Owner Liability

There are three kinds of law that impose liability on dog owners; not all the laws apply in every state: 

1. Dog-bite statute: The dog owner is automatically liable for any injury or property damage the dog causes, even without provocation.
   
2. “One-bite” rule: In some states, the owner is not held liable for the first bite the dog inflicts. Once an animal has demonstrated vicious behavior, such as biting or otherwise displaying a “vicious propensity,” the owner can be held liable. Some states have moved away from the one-bite rule and hold owners responsible for any injury, regardless of whether the animal has previously bitten someone.
   
3. Negligence laws: The dog owner is liable if the injury occurred because he or she was unreasonably careless (negligent) in controlling the dog.
   

In most states, dog owners are not liable for losses incurred by trespassers who are injured by a dog. However, if a dog owner is considered legally responsible for an injury to a person or property the owner may have to reimburse the injured person for medical bills, lost wages, pain and suffering and property damage.

 

Some people purchase dogs for the purpose of guarding their homes; however, deadbolt locks and home security systems can be safer burglary deterrents, and can often earn you a discount on your insurance premium, the I.I.I noted.

 

How to Protect Yourself—And Your Assets

Homeowners and renters insurance policies typically cover dog bite liability as part of the standard policy’s liability coverage, which can range from a limit of $100,000 to $300,000. If the claim exceeds the policy limit, the dog owner is personally responsible for all damages above that amount, including legal expenses. A liability policy also provides no-fault medical coverage in the event a dog bites a friend or neighbor. This allows for medical bills to be submitted directly to the homeowner’s insurance company. Homeowners can generally get $1,000 to $5,000 worth of this coverage. 

 

Most insurance companies will insure homeowners with dogs. However, once a dog has bitten someone, your insurance company may charge a higher premium or exclude the dog from coverage. Some companies require dog owners to sign liability waivers for dog bites. Others will cover a pet only if the owner takes the dog to classes aimed at modifying its behavior. 

 

A single lawsuit—even if won by the dog owner who is being sued—can end up costing hundreds of thousands of dollars in legal fees and lost wages. The greater a person’s assets, the higher the risk of a costly lawsuit. The personal liability coverage available through a standard homeowners or automobile policy may not be enough. Therefore, the I.I.I. advises homeowners to consider purchasing a personal excess liability policy. Also known as an umbrella liability policy, this protects you against personal liabilities, such as dog bites, that could impact a substantial portion of your assets.

 

Umbrella liability coverage usually ranges from $1 million to $10 million, and covers broad types of liability. Most insurance companies have required minimum amounts of underlying coverage—typically at least $250,000 of protection from your auto policy and $300,000 of protection from your homeowners policy. If you own a boat, you must also have boat insurance with a specified minimum amount of coverage. Personal excess liability insurance is relatively inexpensive. The first $1 million of coverage costs about $150 to $300 per year, the second million about $75, and subsequent increments of $1 million cost about $50 per year.

 

Of course, the best way to protect yourself is to prevent your dog from biting anyone in the first place. The most dangerous dogs are those that fall victim to human shortcomings such as poor training, irresponsible ownership and breeding practices that foster viciousness.

 

National Dog Bite Prevention Week^®  (May 19-25, 2012), is an annual event designed to provide consumers with information on how to be responsible pet owners while increasing awareness of a serious public health issue.

 

To reduce the chances of a dog biting someone, consider taking the following steps: 

• Consult with a professional (e.g., veterinarian, animal behaviorist, or responsible breeder) to learn about suitable breeds of dogs for your household and neighborhood.
• Spend time with a dog before buying or adopting it. Use caution when bringing a dog into a home with an infant or toddler. A dog with a history of aggression is inappropriate in a household with children.
• Be sensitive to cues that a child is fearful of or apprehensive about a dog and, if so, delay acquiring a dog. Never leave infants or young children alone with any dog.
• Have your dog spayed or neutered. Studies show that dogs are three times more likely to bite if they are NOT neutered.
• Socialize your dog so it knows how to act with other people and animals.
• Discourage children from disturbing a dog that is eating or sleeping.
• Play non-aggressive games with your dog, such as “go fetch.” Playing aggressive games like “tug-of-war” can encourage inappropriate behavior.
• Avoid exposing your dog to new situations in which you are unsure of its response.
• Never approach a strange dog and always avoid eye contact with a dog that appears threatening.
• Immediately seek professional advice from veterinarians, animal behaviorists, or responsible breeders if your dog develops aggressive or undesirable behaviors.

Most dogs are friendly, loving members of the family but even normally docile dogs may bite when they are frightened or when protecting their puppies, owners or food. Ultimately, the responsibility for properly training and controlling a dog rests with the owner.

For More Information Visit: Insurance Information Institute

Life Insurance Provides Essential Financial Protection—and It Costs Less Than You Think

 Term life insurance can provide an essential financial protection for families and its comparatively low premiums make buying enough coverage affordable, according to the Insurance Information Institute (I.I.I.).

However, many Americans are dissuaded from buying adequate life insurance because they overestimate how much it will cost them. A recent study by LIMRA and the LIFE Foundation, two industry-supported organizations, surveyed more than 2,000 Americans in January 2012, and found that 20 percent of those who had some life insurance, and 49 percent of the respondents who said they had no life insurance, acknowledged they did not have enough coverage. Most reported they did not obtain more, or any, life insurance because it was “too expensive.”

The survey respondents who admitted they needed more life insurance coverage estimated it would likely cost around $400 a year for a $250,000 term-life insurance policy that would cover a healthy 30-year-old for a term of 20 years. But the real annual premium is closer to $150 in that scenario, according to LIMRA and the LIFE Foundation. Life insurance is also available for purchase by middle-aged and older prospective policyholders.

Term life insurance provides protection for a specific period of time and typically offers the greatest amount of coverage for the lowest initial premium cost. Permanent life insurance, also known as whole life, offers lifelong protection and the ability to accumulate cash value on a tax-deferred basis, but has higher initial premiums than a term policy for the same face amount. The death benefits paid by life insurers are income-tax-free, allowing beneficiaries to replace an income-earner’s income, or a family caregiver’s services.

“Term life insurance can provide beneficiaries with a very cost-effective form of financial protection,” said Michael Barry, vice president, Media Relations, I.I.I.

The face-amount of a life insurance policy—the benefit payable to a policyholder’s beneficiaries should the policyholder die while the policy is in force—should be sufficient to do three things.

1.     Replace Income: Buy enough life insurance so that, when combined with other sources of income, it will replace the income you, as the policyholder, now generate for your beneficiaries, while also financing the expenses your beneficiaries will incur to replace services you provide within the household (e.g., landscaping, tax preparation). Most families who lose their primary income-generator to premature death, and have children under the age of 18, have potential post-death income sources besides life insurance. The most common is Social Security survivors insurance. The maximum Social Security survivors’ monthly income benefits for a surviving spouse, and two children under age 18, could be about $2,400 per month, which would increase to match inflation.

Stay-at-home parents, and those caring full-time for an adult family member, should also consider purchasing life insurance so that their children, or any adults needing full-time care, have the resources to hire professionals who can perform those tasks.

2.     Replace Employer-Provided Benefits: This is income that you receive through your employment but is not part of your wages. It includes things like the employer’s subsidy of your health insurance premium, or the matching contribution to your 401(k) plan, and is often overlooked. The cost of replacing just your health insurance and retirement contributions could be the equivalent of $2,000 per month or more.

3.     Cover Death-Related Expenses: These include the funeral costs, taxes and administrative fees associated with “winding up” an estate and passing property to heirs. At a minimum, these expenses can total upwards of $15,000.

RELATED LINKS

Consumer: Life Insurance; Unclaimed Life Insurance Benefits

Facts and Statistics: Life Insurance

Video: Finding a Lost Life Insurance Policy

THE I.I.I. IS A NONPROFIT, COMMUNICATIONS ORGANIZATION SUPPORTED BY THE INSURANCE INDUSTRY.

Insurance Information Institute, 110 William Street, New York, NY 10038; (212) 346-5500; www.iii.org

For More Information Please Visit: Insurance Information Institute

100th Anniversary of the Sinking of the Titanic a Reminder That No One Is Immune from Travel-Related Disasters

UNDERSTANDING TRAVEL INSURANCE COVERAGE FOR CRUISES AND OTHER VACATIONS

While safety records have improved considerably in the 100 hundred years since the sinking of the, supposedly “unsinkable” Titanic ocean liner on April 15^th 1912, disasters at sea, in the sky and on land continue to confront travelers in all parts of the world. Fortunately, travel insurance can provide valuable assistance and financial protection, according to the Insurance Information Institute(I.I.I.).

“Purchasing a travel insurance policy certainly won’t prevent a disaster from happening, but having the right coverage can make things much easier if the unexpected occurs,” said Jeanne M. Salvatore, senior vice president and consumer spokesperson for the I.I.I. “Travel insurance can protect your financial investment in a vacation or business trip and offer peace of mind by providing valuable assistance if there is a natural catastrophe, illness or other emergency while you are on a trip.”

Most travel insurance policies include three basic types of coverage:

1. Trip cancellation, interruption or delay: Provides coverage should you have to cancel a trip due to sickness, a death in the family, bad weather, delayed luggage or another disaster listed in the policy. In addition, if you or an immediate family member become seriously ill or are injured during the trip some travel insurance policies will reimburse you for the unused portion of the vacation. There may be an exclusion for pre-existing conditions, so check your policy carefully. Lastly, some travel insurance policies may provide coverage if the cruise or tour operator goes out of business. If this is a concern, read your insurance policy carefully to make sure it includes this scenario. If you are paying by credit card, you can also talk to the card issuer to see if the company also provides financial protection for this type of event.
   
   For an additional fee, some insurance companies also offer a “Cancel for Any Reason” provision, which covers insured travelers if they “cancel their trip due to the fear of something that may happen” such as civil unrest, a pandemic or the possibility of a natural disaster.
   
   

2. Medical Insurance and Medical Evacuation: Provides coverage if you become sick or injured while traveling. For example, if you had to be airlifted off a mountain due to a skiing or hiking accident, or if you had to stay for a prolonged period of time in a hospital outside the United States. It would also provide coverage if you got seriously sick or were injured and needed to be flown home. Some commercial airlines require very sick passengers to travel on a stretcher with a doctor. This means that you might have to purchase additional seats on a plane which can be very costly. A travel insurance policy will often reimburse you for that potential expense.
   
   

3. 24-hour Assistance: This is a service is provided by most travel insurance companies and can help travelers find doctors, arrange accommodations, contact families or provide other forms assistance in case of an emergency.

Other travel-related coverages may include: Accidental Death, should you or a family member die during the course of a trip; andLuggage Insurance or Personal Effects Coverage, which provides protection if your luggage and/or personal belongings are lost, stolen or damaged during the trip.

The cost of a travel insurance policy is based upon the age of the traveler, the specific coverages selected and the cost of the trip. On average, standard trip insurance policies will cost about 5 to 7 percent of the cost of the trip.

It is important to note that travel insurance is different from the cancellation waivers that many cruise and tour operators offer. Waivers are not insurance; they are relatively inexpensive (approximately $40 to $60) and provide coverage if you have to cancel the trip, but come with many restrictions and are not regulated by state insurance departments. So if your tour or cruise operator gets into financial difficulty, you may not be able to collect any money under the waiver.

There are many different travel insurance companies and types of policies to pick from. When deciding whether travel insurance is right for you, compare companies, policy coverage, benefits and prices. Also find out both what is included and what is excluded. And check your current health and homeowners insurance policies to see what coverage you have. For example, many people are surprised to find that their medical insurance may not cover them in international waters, and may provide no coverage at all for medical evacuation.

To get the travel insurance policy that is right for your situation, talk to your insurance professional or your travel agent. A detailed list of questions to ask when purchasing travel insurance is also available from the U.S. Travel Insurance Association.

RELATED LINKS

I.I.I. Consumer Article on Travel Insurance

U.S. Travel Insurance Association

THE I.I.I. IS A NONPROFIT, COMMUNICATIONS ORGANIZATION SUPPORTED BY THE INSURANCE INDUSTRY.

INSURANCE INFORMATION INSTITUTE, 110 WILLIAM STREET, NEW YORK, NY 10038; (212) 346-5500; WWW.III.ORG

For More Information Visit: Insurance Information Institute

Wedding & Special Event Insurance

Often referred to as “wedding” insurance, special event insurance can be used to cover a 50th anniversary party, a bar mitzvah, a graduation party or any special occasion you might be planning. Special event insurance is designed to provide financial protection if you have to cancel or postpone a gathering due to adverse weather and natural disasters such as hurricanes.

Most policies also provide coverage for cancellation due to the death, illness or serious injury of a key participants in the event, such as members of the immediate family. Also, if an officiant, such as a minister or rabbi, or a key vendor, like the caterer, florist or photographer, does not show up, you can recover some of the costs.

Prices range from around $125 up to approximately $400 depending on the amount of coverage you need.

Additional riders may include coverage for:

• Military service—in the event the bride or groom is in the military or active reserves, and is suddenly called to duty.
• Gowns and tuxedos—includes stores going out of business or damage to the clothing.
• Gifts—if gifts are not covered by your homeowners or renters insurance, provides protection against theft or damage of gifts.
• Honeymoon—in case you need to cancel your trip due to illness, bad weather or other circumstances.
• Professional counseling—when the cancellation or postponement of the event causes severe emotional stress (a doctor’s note will be needed).

Many companies also offer separate liability insurance, but be aware that many event sites already have their own liability insurance. If you are holding the event at home, however, you may want to purchase liability insurance above and beyond what is provided under your homeowners policy.

Before purchasing special event or wedding insurance, find out the following:

• Whether the insurance company is licensed to do business in the state where you live. This information is available from your State Insurance Department.
• How much the policy will cost and how much reimbursement you can expect if a loss occurs.
• What, specifically, is and is not covered by the policy.
• Whether you have coverage elsewhere through credit cards, warrantees or through home, auto or liability or other insurance policies you may already have.

For More Information Please Visit: Insurance Information Institute