HOW TO INSURE YOUR HOME AND PERSONAL BELONGINGS

When you insure your home, you are really insuring two distinct things --

(1) the structure of your home
(2) your personal belongings

THE STRUCTURE OF YOUR HOME
three ways to insure the structure of your home:

1.) REPLACEMENT COST - Insurance that pays the policyholder the cost of replacing the damaged property without deduction for depreciation, but limited to a maximum dollar amount.
2.) ACTUAL CASH VALUE - Insurance under which the policyholder receives an amount equal to the replacement value of damaged property minus an allowance for depreciation. Unless a homeowners policy specifies that property is covered for its replacement value, the coverage is for actual cash value.

If you have an older home...
You should insure your home for the total amount it would cost to rebuild your home if it were destroyed. If you don't have sufficient insurance, your insurance company may only pay a portion of the cost of replacing or repairing damaged items. Here are a couple of tips to help make sure you have enough insurance:

1.) For a quick estimate of the amount to rebuild your home - multiply the local building costs per square foot by the total square footage of your house. To find out the building rates in your area, consult your local builders association or ask your insurance agent to prepare an estimate to guide you.
2.) Factors that will determine the cost to rebuild your home:

a.) the age of the home
b.) local construction costs
c.) basements & attics
d.) the square footage of the structure
e.) the type of exterior wall construction -- frame, masonry(brick or stone) or veneer
f.) the style of the house (ranch, colonial)
g.) the number of bathrooms, additions, decks, and porches.
h.) attached garages, fireplaces, exterior trim and other special features like arched windows.

3.) Check the value of your insurance policy against rising local building costs each year. Ask your insurance agent or company representative about adding an "INFLATION GUARD CLAUSE" to your policy. This automatically adjusts the dwelling limit by a certain percentage when you renew your policy to reflect current construction costs in your area.
4.) Check the latest BUILDING CODES in your community. Building codes require structures to be constructed to minimum standards. If your home is severely damaged, you might have to rebuild it to comply with the new standards requiring a change in design or building materials. These changes could cost more. Generally, homeowners insurance policies (even a guaranteed replacement cost policy) won't pay for this extra expense. However, some companies offer an endorsement (ordianance and law/increased cost of construction) that pays a specified amount toward these costs. (An endorsement is a form attached to an insurance policy that changes what the policy covers.)
5.) Do not insure your home for the market value. The cost of rebuilding your house may be higher (or lower) than the price you paid for it or the price you could sell it for today.
6.) Some banks require you to buy homeowners insurance to cover the amount of your mortgage. Make sure it's also enough to cover the cost of rebuilding your home.
7.) Increase the limit of your policy if you make improvements or additions to your house.

YOUR PERSONAL BELONGINGS
two ways to insure your personal belongings:

1.) REPLACEMENT COST COVERAGE - Insurance that pays the dollar amount needed to replace damaged personal property with items of like kind or quality without deduction for depreciation.

2.) ACTUAL CASH VALUE - Insurance under which the policyholder receives an amount equal to the replacement value of damaged property minus depreciation. Unless a homeowners policy specifies that property is covered for its replacement value, the coverage is for actual cash value.

Here are a few other things to keep in mind when your are insuring your personal belongings:

1.) Check the limits on personal items, such as jewelry, silverware, cameras, furs and computer equipment. If the limits are too low, consider buying a special personal property "endorsement" or "floater." An endorsement is an addition to your policy. A floater is a form of insurance that allows you to insure valuable items separately, and insure them while they are away from your home.
2.) Make an inventory of everything you own in your home and in other buildings on the property, except your car which must be insured separately. Write down the major items you own along with all available information:

a.) serial number
b.) make and/or model number
c.) purchase prices
d.) present value
e.) date of purchase

3.) Don't forget to include indoor and outdoor furniture, appliances, stereos, computers and other electronic equipment, hobby materials and recreational equipment, china, linens, silverware and kitchen equipment, jewelry and clothing.
4.) Take either still or video pictures of these items. Attach receipts to the inventory when available. Store the inventory and visual records away from your home- perhaps in a safe deposit box.

DO YOU NEED FLOOD INSURANCE?

Flooding is not covered by a standard homeowners insurance policy.
To determine if you need flood insurance, ask your insurance professional, mortgage company or neighbors about the flood history in your area. If there is a potential for flooding, you should consider purchasing a policy that covers the structure and your personal belongings. Flood insurance can be purchased from an insurance agent or company under contract with the Federal Insurance Administration (FIA), part of the Federal Emergency Management Agency (FEMA). Flood insurance is only available where the local government has adopted adequate flood plain management regulations under the National Flood Insurance Program (NFIP).

RENTERS INSURANCE

What if you came home from work only to find your apartment had been totally trashed by a burglar? Or what if you walked into your living room and found yourself standing in a 3 inch flood of water? Well, if you think it's not a major problem because your landlord will foot the bill, YOU'RE WRONG.

Your landlord's insurance does NOT cover your personal property. Things like your clothes, stereo, furniture, television, bicycle, jewelry, personal computer, artwork and other items are not covered by your landlord's insurance against destruction or loss. As sorry as your landlord may be about the 3 inches of water in your living room or your stolen stereo, you're the one who'll have to buy a new couch and stereo system, not him.

But renters insurance covers your personal belongings:

• protects you against losses from fire or smoke, lightning, vandalism, theft, explosion, windstorm, and water damage from plumbing.
• covers your responsibility to other people injured at your home or elsewhere by you, a family member or your pet, and includes legal defense costs if you are taken to court.
  

COMMON QUESTIONS

Q. Does renters insurance cover all my personal belongings?
A. It depends. Some things like - jewelry and computers - often have a per-category limit (for example, some policies have a $5,000 limit for computers). For these things you may want to buy a "floater", this provides additional coverage for specific items not included in your basic policy and covers them while away from your home.

Q. If I file a claim, will my policy be cancelled?
A. If you didn't cause the loss or damage, your insurance shouldn't be affected. If you were at fault -- if you caused a fire by smoking in bed for example -- the insurance company might consider this when setting the price for your next policy or offering coverage at renewal time.

Q. Are my belongings covered away from home?
A. Yes, but coverage amounts vary from 10% of your personal property coverage to the full value. Check with your agent!

Q. As a student, am I covered by my parents' policy?
A. If you're in college, and your parents have a homeowners or renters insurance policy, their insurance might give you limited coverage in the dorm, but not if you live in an apartment. Again, check with your agent or insurance company!

Q. Can I purchase a renters policy with my roommates?
A. Yes, but the regulations might be different from state to state, and the policies might also be different from company to company. Find out what regulations apply in your state and then shop around to find an insurance company that can help your situation. Each roommate's name should be included on the policy.

Q. What about unmarried couples?
A. Some insurance companies now allow unmarried couples who have been living together to obtain joint coverage, rather than two separate policies. Each person's name should appear on the policy.

Q. What happens if my rented or borrowed items are stolen?
A. Items that are "in your possession" are covered under a standard renter's policy.

Q. Is my bike or car covered by renters insurance?
A. Your bike is covered, but vehicles aren't. You need to get a separate auto insurance policy to protect your car, van or motorcycle. If you have an all terrain vehicle (ATV) you should check with your agent about obtaining insurance!

HOW DO YOU BUY RENTERS INSURANCE?

1) Take An Inventory:
Make a list of everything in your apartment. Record model numbers, serial numbers, date of purchase and price of item. Take photographs or make a video of these items. Give one inventory to your insurance agent, and keep another for yourself. Keep your inventory and visual record of your things outside of the apartment, maybe in a safety deposit box or at the office.

2) Ask About:

• Theft Limits - For example, most renters policies have a $1,000 total limit on jewelry that is stolen, a $3,000 - $10,000 limit for computers. Ask for a list of standard coverage limits so you know whether you'll need to get additional coverage for some of your personal belongings.
• Actual Cash Value Or Replacement Value - Your policy can insure your personal belongings in one of two ways--either for the cash value or the replacement cost.
• Actual Cash Value coverage takes into account the age and condition of items at the time of damage or loss. You would be reimbursed for the value of the item minus depreciation.
• Replacement value pays today's cost for an item of similar kind or quality, subject to the limit of insurance.
• Deductible Options - Find out about the deductible or your out-of-pocket cost. Keep in mind that raising your deductible will lower your premium.

3) Discounts:
Insurance companies frequently offer discounts to their auto policyholders interested in buying a renters policy from them. You can also get discounts if your apartment or home has a security system, smoke detectors, or deadbolt locks. More discounts might be available depending on your age or whether you're a non-smoker.

4) Shop Around:
Look on the Internet, ask friends or relatives or flip through the yellow pages to find the agent that is right for you. Call a variety of insurance companies and agents and ask a lot of questions. Keep your inventory handy, so you can find the amount of coverage that is most appropriate for you. $15,000 is usually the lowest amount of coverage you can get.

5) Review Your Policy:
Review your policy with your insurance professional so that you understand what's covered. For example, earthquake and flooding is not a covered peril in a renters insurance policy. However, if you live in a flood prone area, you may want to consider purchasing a flood insurance policy.

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