Renters…Top 5 Reasons Why You Need Renters' Insurance

If you are a renter and you don’t have renters’ insurance, the question we want to ask you is…Why? Renters' insurance is essential to peace of mine.  Even though you don’t own a home at this moment does not mean you should not be insuring and securing the items you purchased which are important to you and your family.  You worked hard for what you got, so getting insurance for the ‘fruits of your labor’ should be a no-brainer. Therefore, we put together a list of the top 5 reasons why you need to get renters’ insurance today if you don’t have it now.  They are as follows:

1. It’s inexpensive – Renters’ insurance costs pennies a day, typically $12-20/month. Also, it can be used as a package item with your auto insurance which can offer more discounting.  When you consider that the average family owns many thousands of dollars in personal property, this minor cash outlay can be quite a deal. Typically, you could pay for renters' insurance for many years without a claim, and then have everything you've paid in justified by a single home invasion or house fire. Remember, without this coverage, you are responsible for replacing all of your belongings out of pocket.
   
2. Landlord policies do not protect tenants - Your landlord's insurance policy is for the home and other structures, but it does not include your own property or liability concerns. Because your landlord does not have an insurable interest in your property, you will have to purchase a renters' insurance policy or other personal property insurance on your own.
   
3. Renters’ insurance covers theft - If your rental home or apartment is burglarized, a renter's insurance policy will pay to repair or replace everything lost in the invasion. Without renters insurance, you would have to replace your personal property out of pocket, an expense that could be financially devastating.
4. Renters’ insurance covers bodily injury liability - If someone other than an immediate family member is injured as a result of you or your personal property, the medical costs would be covered under a renter's insurance policy. Injuries to yourself or your immediate family are not covered and should be handled through your health insurance plan.
5. Renters’ insurance includes damage liability - If your property causes damage to the property of someone else, even your landlord, a renters’ insurance policy will pay for the damages. This could be something like a broken flower pot or mailbox, or your daughter accidentally hitting a fly ball through the neighbor's window.

Protect what yours. The cost is low, but the price you could potentially pay without it may be devastating. Insure to reassure.

The number one task you must do today is: Review your homeowners’ policy. As I speak to new clients and ask them about their existing home insurance policy, I now understand how a recent study done by a recognized insurance consultant firm found that 2/3 of Americans under-insure their home.  While another survey found that 50% of American homeowners do not have a clear understanding of their home insurance coverage.  Meaning they do not know the A, B, C & Ds of their policy (Coverage A, B, C & D).

Most consumers believe their policy limits are based on the real estate value of their home, rather than the replacement cost of the physical structure.  A question I hear asked is, why do I need so much insurance if the value of my home has plummeted? The assumption that these two numbers are tied together causes people to think they are paying for coverage they don’t need.  

People must recognize that market values are based on factors such as locations, condition of neighboring properties, prevailing interest rates, local market conditions and even property taxes.  None of these influences what your insurance really covers: your home’s replacement cost.  The cost to rebuild your home exactly as it is now, in its current location, and using the same materials and workmanship.  Despite a severe economic downturn, the cost of building has shown no signs of decline.

A big misconception is that new home prices reflect the cost to rebuild. Reasonable assumption, but not true.  Rebuilding a home is almost always more expensive than building a comparable new one.  Demolition and removal of a destroyed home must occur before rebuilding even begins, local ordinances often place regulations on demolition that can increase expenses and builders can’t buy materials at volume discounts when working on a single home.

The reality is that some people buy their policy and never look at it again.  I recommend that you review your insurance coverage at least every other year, but it’s especially important to adjust your policy when you make improvements like adding a deck, a bathroom, or updating your kitchen. 

The value of your insurance is not as much about the price as it is about protecting your assets.  You worked hard for what you have, and protecting your family’s financial security is just the other half of the equation.  So, by being proactive you can influence both sides and have the peace of mind you deserve. 

Auto Insurance 101- Top 3 Keys You Need To Know
 
I have found that when I ask potential new clients about their existing auto policy, the average insured person doesn’t have an inkling or clue to what is in his/her policy.  Which ultimately means they don’t know what they are paying for, nor how much protection they truly have.  Therefore, let’s do a quick rundown of the top 3 components of your auto policy you need to know.  They are as follows:

1. Limits – Most auto policies are written on a split limit basis (such as $25/50/10).  The split limit basis provides a maximum in any one accident for injury to any one person, and provides a maximum for all persons injured in any one accident and provides a maximum for all property damaged in any one accident.  For example: The insured carries the above split limit of coverage.  She has an at-fault accident and two people are severely injured.  One sustains injuries of $50,000 and one has $25,000 in injuries.  The policy can only pay the per person limit of $25,000 for each or a total of $50,000.  The remaining $25,000 in injuries cannot be paid because of the $50,000 per accident limitation.  Which means in this case you as the insured have to come up with the remaining $25,000 owed (ouch!!). The $10,000 limit is for damage to property of others including loss of use.  Note:  I usually recommend a 100/300/100 for my clients.  Maybe the cost is a little more in premium total; however, the peace of mind of having more protection is worth the price.
2. Collision/Comprehensive (Deductibles) – This section focuses on the coverage of damage to your automobile.  It provides coverage for accidental direct damage to a covered auto and non-owned autos, including their equipment caused by: 1) Collision – The technical definition is defined as the upset or rollover of a covered auto or its impact with “another” vehicle or object. 2) Comprehensive – provides coverage for the vehicle from losses other than collision which includes: theft, windstorm, breakage of glass, contact with bird or animal, fire, water or flood, malicious mischief or vandalism.  Note: This section impacts your premium – the lower the deductible, the higher the premium cost.  The insurer has to weigh its risks.  Odds are the higher the deductible the more likely you won’t make trivial claims; therefore, less costs to the insurer and less premium for you.
3. Uninsured Motorist – This section is also shown on a split basis.  This coverage pays the insured and occupants of the insured auto against bodily injury claims which they are legally entitled to recover resulting from an auto accident with: other drivers who have no auto liability insurance; the insured is carrying less than the financial responsibility amount of their home state; hit and run drivers; drivers whose insurer denies coverage or becomes insolvent.  Again, focus on peace of mine here. The higher the limits; the more protection. 

Understanding these three core pieces of your policy will help put you in the driver’s seat (no pun intended) of being able to have an articulate conversation with an auto insurance agent.  Education is the true key to controlling the reigns of your personal expenses and protecting the assets that are important to you.

Try these 4 Ways to Reduce Your Auto Insurance Premiums
 
Through my time as an independent agent I’ve learn that knowledge is power. This power has assisted my clients with meeting and exceeded their objectives.   One way to help meet one’s financial objectives is to reduce personal expenses and streamlining auto insurance premiums can assist with that goal.

Remember insurance premiums are based on three fundamental questions – Where do you live? Who are you? What do you drive? However, there are tactics that can help to create a savings cushion for your personal finances. Here are my top four ways that I help my clients reduce their auto insurance costs.  They are as follows:

1. Check Every Two – Look to shop your auto insurance policy at least every two years.  Insurance carriers are always looking for new markets to penetrate.  Therefore, a new entrant or even an existing player in your geographic area are always looking for new customers to help build their portfolio.  A great way to grow market share is to offer competitive pricing.  Reach out to an independent broker agency that has the capability of getting quotes from more than 5 carriers in your geographic location.  You can always use it as a bargaining tool with your existing carrier.  Price checking goes a long way to making sure you are getting the best deal.
2. Leverage the Package – Combine your auto insurance with your home insurance policy.  Insurance carriers want  partners and lasting relationships.  What better way to maintain a lasting relationship than by connecting to your prize asset – your home.  Linking your auto coverage with your renter’s or homeowner’s insurance can produce an average of $235 per year in savings, according to Consumer Reports.
   
3. Deductibles That Fit – Raising your deductible from $500 to $1000 has shown to save drivers on average $140 each year, according to Consumer Reports.  The main thing to consider here is to make sure you can afford a higher deductible.  I always recommend this tactic to my clients that are great savers and have solid cash reserves for emergencies.
   
4. Credit Does Matter – Your FICO score can impact your premium.  Not paying your bills on time can affect your auto insurance premiums more than having two DUIs.  Consumer Reports recently found that a two-car couple with poor credit on average would pay an extra $2,090 per year in premiums compared to a couple with excellent credit.  That is more than the extra $1,750 annually a two-car couple would pay if they had two violations for a DUI.  Get a copy of your recent credit report – I recommend www.annualcreditreport.com.
   

 
Auto insurance is a necessary price we all share in order to drive.  However, it’s not a compelling topic and most people don’t like to spend a lot of time on it. However, with a little due diligence and time, a car owner can save a lot of money.  Connect with a partner that can do the work for you.  We are talking in many cases hundreds of dollars in savings per year.  It’s worth it.