 Personal Finance PowerPoint Presentation, Renters Insurance. Prepare to get financially fit by practicing personal finance. Most of this information can be found at Investopedia Renters Insurance, which you can find online. Take a look at the references, resources, continue your research from there. This is by Julia Kagan, updated February 19, 2022. What is Renters Insurance? Renters Insurance is property insurance that provides coverage for a policy holder's belongings, liabilities, and possibly living expenses in case of a loss event. So clearly, when we're thinking about Renters Insurance, that's because we're possibly renting for our living situation as opposed to a home ownership situation where we might be considering then the homeowner's insurance. So it's available to persons renting or subletting a single family home, apartment, duplex, condo, rental, loft, or townhouse. The policy protects against losses to the tenant's personal property within the rented property. So clearly, we're thinking about the actual property that is in the rented area. We're not having the insurance on the actual structure itself because we, the policy holder, doesn't typically own the structure. We are renting the structure and therefore having the safeguard and other things that we own, the things inside of it. Landlord then might have some other type of insurance to guard the actual structure itself given the fact that they are the owners of it. So in addition, a Renters Insurance policy protects against losses resulting from liability claims such as injuries occurring on the premises that are not due to a structural problem with the property. In that case, the owners, not Renters Policy, would apply. So Renters Insurance explained increasingly, proof of Renters Insurance is required by many landlords. So oftentimes, when you go into renting a place, you want to live in a place, you got to break down and think about what the rental amount will be. But they also might require the Renters Insurance as well, which could be that added cost. So in that situation, when you think about Renters Insurance, you're often thinking, well, why do I get Renters Insurance? Because I'm required to, in some way, shape or form to get the apartment or something like that. But you also want to know your pros and cons of what you're getting with the Renters Insurance. And if you're not required to have Renters Insurance, it still might be something worth considering, or it is worth considering and possibly worth purchasing after you've considered it. So personal belongings within a rented property are typically not covered under the owner's or landlord's property insurance. So in other words, if the place burns down, the landlord's going to ensure the actual place, not your stuff inside of it. And so therefore, if you're going to have coverage for the stuff, then you're typically going to need the Renters Insurance. So for example, if a flood or fire destroys all the personal property with a rented apartment, the structure would be covered under the landlord's policy, but the personal property would only be covered through a Renters Insurance policy. Because you have two separate people opening two separate components. The landlords can't cover what's inside, typically with their policy. We need the Renters Insurance for that. So without this coverage, the tenant would be responsible for the loss out of pocket. In general, Renters Insurance offers three types of financial protection. So we've got the coverage of personal possessions, liability protection, additional living expenses, protection. So clearly, when you're weighing out the Renters Insurance, there's a couple of factors that would be involved. You'd be saying, okay, am I required to have it due to the landlord requiring it in this particular place that I'm in? If you want to be in that place and they require it, then you're going to have to deal with some kind of Renters Insurance. Oftentimes, they have some recommendations in that instance on what Renters Insurance they typically work with. And if they don't require it, then your thought process might be, well, do I have expensive stuff that, you know, how much of a burden would it be if something happened and I had to replace all my belongings? If I have pretty feeble belongings and I don't have a whole lot of expensive stuff, maybe I don't need the insurance on it. But if I've got a lot of cool stuff, you know, in my apartment place that I, you know, then, of course, the Renters Insurance will be more and more worthwhile as is insurance kind of, in general, oftentimes when we're looking at property types of insurance as insurance and possibly liability insurance, as wealth goes up, as income goes up, as belongings go up, then more likely that you might need different sorts of insurance. If you don't have much, then it's not a big loss and you might not need the insurance too much. So the following questions will help you choose the right coverage when you are shopping around for Renters Insurance or discussing your needs with an insurance professional. Renters Insurance coverage for personal possessions. Renters Insurance coverage for personal property from loss due to theft, fire, or other types of disastrous loss events. You should buy enough Renters Insurance to replace all of your personal possessions in the event of a loss event. So the easiest way to determine this amount is to create a detailed list of all your belongings with estimated values. Now, this sounds kind of easy. It's not really the easiest thing to do because all the stuff that you bought, all the things that you had, you know the cost, how much you purchased them for, but even that could be a little bit difficult and what's their value at this point in time and so on. But you can get an estimate. You can at least, of course, list out all the items. You might want to take a picture of all the items so you have kind of a list of all the stuff that you have in the event that the problem happens. So you can choose, and also of course, if you're going to save that list of stuff, you might want to save it online on the cloud or somewhere outside of the actual place that you're insured against because of course, if it burns down and your list burns down, then, you know, that could be a problem too if you're using that list at that point in time. Clearly, you're going to use the list first of all to kind of figure out how much insurance possibly you need. So you can choose between replacement costs or actual cash value, ACV coverage. ACV policies pay only for what an item was worth at the time it was damaged or destroyed. So again, you got this issue of how much you paid for it and how much it's worth at the point in time it was destroyed. Most things deteriorate over time, like depreciate. They go down in value, unless it was jewelry or something like that, which could go up in value, but most stuff goes down in value. And therefore, you would expect if you got the actual cost, it would be less than possibly replacement costs. So replacement cost coverage costs more, but it will provide a payout large enough to buy a new item to replace the old one at the current full retail price. So replacement cost is saying, hey, look, you know, I need a new one at this point in time. So you can't just, if I just get the money back that was worth the old one, that's not gonna be enough to buy the new one. So the replacement costs would be the more money, so that would be beneficial in the event that the problem happened, the emergency happened, and you needed the insurance, but clearly it would cost more insurance in terms of the premium. If there are abnormally high value possessions, a renter may want to add a floater, which is a separate policy that provides additional coverage for costly valuables if they are lost or stolen. So all like my Van Gogh paintings and my expensive jewelry and like chains and whatnot, I don't have any of that stuff. But if you did, you'd want maybe more insurance to cover that kind of stuff, the fancy stuff. So renters insurance covers a policy holder, renters insurance covers a policy holder against losses from fire or smoke, lightning, vandalism, theft, explosion, windstorm, and certain types of water damage. However, most renters insurance policies do not cover floods or earthquakes. So those are always the two that if you're in a flood or earthquake zone, you're always thinking, okay, do I need more insurance to cover those particular things? Flood insurance is available from the National Flood Insurance Program and a few private insurers. Earthquake insurance can be bought separately or added as an endorsement to your renters policy depending on where you live. For example, in California, that's where I'm at. I'm here in California. Then we have earthquakes here. So you might have, you know, you might want earthquake insurance of some kind. Obviously a high-risk state for earthquakes, the legislature created the non-profit California earthquake authority to help people get affordable coverage. So you could check that out if you're in California. Renters insurance liability protection. So now we've got the liability protection component as opposed to the property kind of protection component, the property protection, of course, if there's some kind of event and the property was destroyed, then we're looking for some kind of replacement or recouping of the value of it. With the liability insurance, we've got some kind of issue that we possibly are responsible for or people are trying to hold us responsible for that is going to have some possible costs related to it as well. So renters insurance provides liability protection against lawsuits for bodily injury or property damage done by the renter, their family members and pets. This coverage covers legal defense costs up to the limit of your policy. So a renter's policy should also include no fault medical coverage as part of the liability protection. This coverage allows someone who gets injured on your rented property to submit their medical bills directly to the insurance company and lieu of a lawsuit. So it might be a more direct way to go. Kind of remove the lawyers hopefully and save a whole lot of money, which would be great if that could happen. So renters insurance, ALE coverage, additional living expenses, ALE coverage provides financial protection against and ensures disaster that makes it necessary to temporarily live somewhere else. The coverage will pay for hotel bills, temporary rentals, restaurant meals and other living expenses while a rental home is being repaired or rebuilt. So in other words, if there's some kind of event that happens that actually destroyed the property or something like that, well then you could have your property have been damaged and so on and so forth, but you're also going to be displaced for a while and so you could think about coverage that would help you for your living expenses in the event that you were displaced for a while. So most policies will reimburse you for the full difference between your additional living expenses and your normal living expenses. So you could think about what your normal living expenses are and then the additional living expenses in the event that you no longer have the place and you're dealing with those expenses which you would expect would be including where you have to pay to stay, possibly hotels and whatnot at that point. So there is however either a dollar limit on the total amount and insurer will pay or time limit on the ALE payments. So clearly when you think about these kind of payments then you might say well I'm going on vacation my place got messed up and it's insured and I'm going to have living expenses in the Bahamas or something like that. Well that's probably something they're going to mitigate against how much living expenses you're going to have and how long you could be outside the home living somewhere else.