A device that is often considered, but rarely considered, that may or may not be a good idea – Renters insurance is certainly a phenomenon once it is pronounced in your presence. Too often, it is seen as applying to all or none, without a middle ground. “Renters insurance is a good idea” … or “Renters insurance is a scam”; Did you hear any? Thought like this. Oh how generalities plague market demand. rare approach, showing how to determine whether renters insurance is a good or bad idea for YOU … specifically.

A short description: What is it?

Renter’s insurance exists to protect the belongings of residents who do not own the homes in which they reside. Furthermore, it diverts financial risks from liability to the insurance company, which means that if an accident occurs on your rental property for which you are legally responsible, the insurer (the company) will incur financial damage. Examples here include, but are not limited to, someone tripping over your carpet and breaking an arm, leaving a bathtub running and destroying the property of those in an apartment below you, or even setting off fireworks inside. and burned the entire building, including all of his neighbors’ (anyone?) possessions.

Going back to personal property loss: here are the 17 types of perils that result in the loss of your property that will be covered by renters insurance:

• Damage from electrical surge
• Ice, snow and sleet damage
• Utility water damage
• Fire and lightning
• Falling objects
• Volcanic eruption
• Resulting loss of glass or any glass material considered part of the building.
• Theft
• Smoke
• Vandalism and mischief
• Disturbance
• Hail and wind
• Aircraft
• Explosion
• Vehicles

Nationally, the most widely considered property loss prospects for tenants are theft and fire. Depending on your area and home location, flooding can also be a problem; however, flood insurance is not included in a standard policy, requiring an additional rider to be included. Regardless, for our purposes today, we will focus on theft, fire, and liability. There are two types of policies: real cash value coverage and replacement cost coverage. The first (ACV coverage) covers only the depreciated value of your items, not the cost of replacing them; for this, RC coverage is required. We’ll get into recommendations between the two in a moment.

This is the rough calculation process we suggest to help you decide if renters insurance is a worthwhile purchase. Keep in mind that most insurance policies have annual costs between $ 150 and $ 300 with some type of deductible.

Step 1.) Analyze your risk of liability damages

• Those who live on the second floor or higher have a greater propensity to be liable for damage to the property of neighbors, considering that the people are directly below. Waterbeds can ruin your life; if it appears, be prepared to cover the damage of those living below you.
• You have a dog? If so, renters insurance will provide protection in case the animal releases its testosterone on your neighbors or visitors. Be especially careful if there are small children living nearby.
• Those with frequent visitors are more likely to have a non-inhabitant suffer some form of injury at the residence in question. Watch out … you never know when a friend will get into litigation on your butt.

If you think your home is high risk, it’s a self-timer to start shopping for insurance. If not, then dig deeper and let’s take a look at your property’s value and potential loss.

Step 2.) Evaluate the value of all your possessions, segregate “stolen” possessions

• ““Steal” possessions are items that can and are available to be stolen in the event of theft: televisions, DVD players, computers, jewelry, or even cash that are normally kept on hand, among other things. Victim of theft, as it is unusual for all possessions to be lost.
• Total Possessions: Include everything here, from your shoes to your hair dryer. The estimates are exactly as stated, estimates. Just imagine losing it all and consider the costs of getting it all back. This is necessary to assess your loss in the event of a catastrophe such as a fire in which all is lost.

Step 3.) Estimate your risk of loss

• There are 105 million homes in the US And there are about 350,000 fires for which a Fire Department. It is necessary to stop the flames, so based on history, there is almost a 3% chance of a catastrophic fire occurring in your home. Although not all of these fires will destroy everything, it is worth keeping the odds of complete destruction at 3% as it helps to adapt to dark hazards such as falling objects or vehicle damage.
• For theft, check Neighborhoodscout to look up crime rates in your state and even in your specific area. We will use the state of Georgia as an example where there are 46 robberies per 1000 people per year (4.6%).

Step 4.) Put it all together

–Now I know that my risk of total loss is around 3% and my risk of theft is 4.6%. If my total possessions are worth $ 25,000 and I calculated that my “steal” things are worth $ 5,000, then here is how to calculate the value of the annual risk of loss for me.

(.003 * $ 15,000) + (.046 + $ 5,000) = $ 275

– Basically, this takes 3% of your $ 15,000 in total items and adds it to 4.6% of your $ 5,000 “steal” items … add them up and you risk covering potential property losses. It should be worth you on a yearly basis. Also, if your residence is, by your estimate, considered “risky” in terms of liability, then a quote from an insurance company of $ 275 per year is not so bad.

Next, let’s clarify who should definitely research renters insurance:

• Families with children (this is a must)
• For those who run businesses from their homes, everything they worked for could be lost.
• Dog owners
• And, my favorite, those with waterbeds on the second floor (or higher)

Keep in mind that even if you live in a friends house, a negligent act on your behalf resulting in the loss of a roommate’s property leaves your checkbook on the hook. To trace a bit, when deciding between ACV (actual cash value) coverage and RC (replacement cost), you really need to consider what it would cost to replace your items. ACV will simply take the depreciated value of your items and give you all they are worth. However, it may actually cost you more to replace such items as you will have trouble finding similar items for the money you received. If your stuff is getting old, get replacement cost coverage (a little more expensive, but worth it). If your things are relatively new, you can probably slip in with the less expensive ACV coverage, since your things haven’t had long to depreciate.

On a final note, it is important to know exactly why you are buying renters insurance and what items it is actually protecting. This way, you will really understand whether or not it is worth your time and money to sign up. Monthly costs can be reduced by increasing your deductible or by simply taking precautionary measures to avoid a catastrophe (fire extinguishers, locks, etc.). If you have a little extra cash to spare and Senor’s insurance broker quote seems like a good deal, go for it, but if it just doesn’t add up … you shouldn’t be ashamed to turn the other cheek to insurance. It’s your world, protect it as you see fit. Bada bing, bada BOOM …….. Salloum. Until next time.