1. 37376 POINTS
    David G. Pipes, CLU®, RICP®
    Business Development Officer, T.D. McNeil Insurance Services, Fresno, California
    There are several ways that you can purchase a “renters’ policy.” If you search the internet you will find some websites that will actually quote and issue a renter’s policy. The problem you face with this approach is that a policy is selected to pay your damages when you suffer a loss may be inadequate. It is quite likely that when you actually suffer that loss you will find that you are not sufficiently insured. Then the insurance policy you have been paying on becomes the most expensive policy that you could have purchased because it won’t cover your loss.

    The better approach is to engage an insurance agent. You may not know an agent. Get recommendations from your neighbors, friends and colleagues. A good agent will listen to you, provide sound financial advice and communicate clearly with you and the insurance company. You really want everyone to be on the same page at the time of a loss.

    The agent will probably start by asking you the value of your personal property. To prepare for that question, I suggest that you take pictures of everything that you own. You can store that valuable record off site in case of a loss. Review the pictures and make an estimate of the cost to replace everything that you own. The sum of those estimates determines the value you need to set on your renter’s policy. Remember that you are looking at replacement value, not current value.

    In this process you might have property that is subject to internal limits within the policy. You need to specify the replacement value of any jewelry, guns, computer equipment, and collectibles. There are other classes of property that warrant special attention. Ask the agent about any unusual property that might be in your possession.

    The next thing that the agent will discuss is the liability limit. Insist on the highest limit that the agent can write. You can never have enough liability insurance. This protects you by providing for your defense and any awards against you up to the limits of the policy. You want these limits to be very high. A lawsuit can ruin your life.

    If you have a pet make sure that the agent knows about the pet. This is particularly important if you own a dog. Policies often have greatly reduced liability limits for dogs and may exclude all coverage for dogs of certain breeds or with a history of biting. This is a major source of claims.

    If you have a trampoline on the property makes sure that the agent knows that as well.

    Often owning a renter’s policy is a requirement of a lease. In those cases the landlord generally wants to be named as an additional insured. You need to have his or her name and address to provide to the agent. Incidentally, this is a reasonable requirement of the landlord and might be required by his or her insurance company.

    The final piece of information has to do with any losses that you might have previously suffered either at the unit you are currently renting or another unit. The information should be as detailed as possible to assist in underwriting your application.
    Answered on October 1, 2014
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