All right, let’s be honest the topic of homeowner’s insurance is not a sexy one. But it is a topic that is fraught with misconceptions. And these misconceptions can leave you vulnerable and dangerously uninsured.
Maybe you don’t live in a flood or earthquake zone and feel that this is not a relevant topic for you. However, if you have ANY assets or possessions you cherish, it absolutely is. The reason is that many people don’t understand exactly what their insurance covers and whether it is adequate for their particular circumstances. You and I may have the same type of home, in the same neighborhood, valued at the same amount of money. However, you may need more insurance than I do. Why you ask? There are a variety of reasons. And if you are not aware of them you may not be as properly insured as you think you are.
And for all you renters out there who are ready to tune out, if you don’t have renters insurance in the event of a disaster risk losing all the possessions in your home and having no recourse. Your landlord may have homeowners insurance but that only protects his property not your “stuff” so keep reading.
And here is a sobering statistic for us Latinos: while only about 31 percent of renters buy renter’s insurance that number drops to 15 percent amongst Hispanics.
In my quest to provide you with current and accurate information I turned to the I.I.I., Insurance Information Institute, a non-profit organization. I am NOT trying to sell you a policy. My goal is to make sure you protect yourself and your family.
First, it is important to understand that standard homeowner’s insurance covers home most major disasters with two exceptions, floods and earthquakes. With that said, let’s explore some things you may not be aware of.
Renter Insurance Realities
Did You Know?
Your landlord’s homeowner’s insurance only cover’s his property not your personal possessions. If there is a fire or other disaster and you do not have renter’s insurance it is your loss. A renter’s insurance policy will cover your belongings against losses from fire or smoke, lightning, vandalism, theft, explosion, windstorm and water damage (not including floods).
Renter’s insurance is very affordable. According to the National Association of Insurance Commissioners, the average renter’s insurance policy costs about $184 per year. (This rate is based on a quote from 2009, the latest year this data is available) This translates into less than $16 per month.
Assessing Your Personal Property
Did You Know?
Even with a standard homeowner’s policy if you have valuable property such as collectibles, jewelry, furs or expensive electronics you may want to rethink your coverage because you standard policy may not be enough to cover replacing them? Most insurance companies provide personal property coverage equal to about 50 to 70 percent of the amount of insurance you have on the structure of your home. So if you have $100,000 worth of dwelling protection, most insurers would recommend $50,000 to $70,000 worth of personal property coverage. If you think your personal property is worth more than 50 to 70 percent of the amount of your insurance coverage you may want to think about increasing your coverage.
To assess how much coverage you need to create a home inventory to assess the value of your ‘stuff’. Then compare it to what your policy will cover in the event of a total loss of your property. To make it simple the I.I.I. provides free Web-based home inventory software, Know Your Stuff®. Or if you have an iPhone, you can download the new Know Your Stuff® - Home Inventory app in the iTunes App Store .
Assessing Your Liability
Did You Know?
- A pool is considered an “attractive nuisance” and you may need additional liability insurance to be adequately covered in case of an accident. If the pool is expensive you should have enough insurance to replace it in case of a storm or other disaster.
- You are liable for your pets. So if you have a dog, even if it doesn’t bite, you should consider additional liability insurance.
If you have significant assets you may need more liability protection than is offered under the standard homeowner’s policy limits. In this case you may want to consider umbrella liability.
Should I Buy Separate Flood Insurance?
Did You Know?
Standard homeowner’s insurance does not cover flooding. And even if you don’t live in flood or hurricane zone you may be vulnerable in the event of a freak natural disaster. They happen.
There is a 30-day waiting period before flood insurance coverage takes effect. So if you do live in a flood or Hurricane zone it is important that you don’t wait until the last minute to buy a flood insurance policy.
Flood insurance is available for renters as well as homeowners.
Final Tip: Even if you are adequately insured consider keeping important documents in a fire resistant box.
Now that the issue of insurance is on your radar take a little extra time to make sure you and your family are protected. You may be thinking that you probably have enough coverage and it’s unlikely you will ever need it anyway. I venture to bet that a lot of those families we see on tv after a disaster thought the same thing. Why risk it?
Marlene Pratt is the co-founder of Casa Latina, an interior designer and on-air television host on both English and Spanish-language television. Follow Marlene on Twitter at @CasaLatinaToday and Like her FB page