Protecting your property is an important part of risk management. Real property includes things such as your house and other structures within 100 feet of your house (e.g., fences, tool sheds). Personal property includes things such as furniture, clothing and appliances.
You protect your real and personal property with homeowners or renters insurance. The following are important things to consider when choosing a home or renters insurance policy:
First take an inventory of what you own
Make a list of what you own. Include style, model numbers, and how much the item cost. You may also consider taking individual pictures or videotaping the items. You should only need to include major purchases on this list. In a disaster situation this list will help you as you make a claim to your insurance company. Remember to keep this list, video, or pictures at a location away from your home (for example, in a safety deposit box or with a family member).
Do you have any unusual but valuable possessions?
Now that you have taken an inventory of your possessions, do you have any valuables? If you do, they may not be fully covered under your insurance policy. You may want to consider increasing the coverage for those items. Depending on the increased coverage, your premium may go up, but typically not very much per billing period. If the cost of added coverage is too much for your budget you may want to consider increasing your deductible. This means in the event that something happens to your valuable you will be responsible for more upfront before payment is made by the insurance company. Consider the personal value of this item. Will it be worth it to you?
Replacement cost coverage
This type of coverage will allow you to have any lost items replaced for the current price. Without this type of coverage you will only receive a portion of what it would take you to replace the item. Insurance typically only covers the current value of any insured item.
Flood and Earthquake Insurance
A typical insurance policy will not include coverage for damage due to flood or earthquake. These types of insurances are more expensive, but it is up to you to determine if you need the coverage. If you live in a flood plain, flood insurance is required. If the nearby canal or river were to flood, your home and possessions would be covered with this insurance. If you live near a fault line, earthquake insurance is not required. But remember that earthquake damage is only covered with this specific insurance. It is up to you to determine if you need this coverage.
- basic form
- broad form
- comprehensive form
The type of policy you have determines which perils you will be protected against and the dollar amount of that protection. Perils are the dangers your property may be protected against in your homeowner’s policy. Examples are fire, lightning, windstorm, hail, explosion, riots or civil commotion, damage by aircraft, damage by vehicles (not your own), damage from smoke, vandalism, malicious mischief, theft, window breakage, falling objects, weight of ice, snow, sleet, collapse of part or all of building, damage from steam heating or water heating appliances, leakage or overflow of water or steam, freezing of plumbing, heating and air conditioning systems, home appliances and short-circuit damage to electrical appliances. Talk with your insurance agent about how much coverage you need.
A basic policy usually protects you against personal liability and property that is destroyed.
A broad policy covers everything the basic policy does plus seven other perils.
A comprehensive policy protects you against the perils covered in the broad policy plus all perils not specifically excluded.
Renters insurance is similar to homeowners insurance, but it covers personal property (furniture, clothing, appliances you own) when you rent an apartment or a house. The landlord’s insurance coverage does not reimburse renters for loss of their personal property.
Some policies may not cover the total value of all your personal possessions. Limits are often placed on cash, jewelry, electronic equipment, china and silver, furs and guns. Ask your insurance agent about a “floater” policy to provide additional coverage.