RENTER’S INSURANCE | POLICY CHECKLIST
1. Assessing the Value of Property – this is where you need to consider whether or not to opt for Actual Cash Value (ACV) or Full Replacement Cost (FRC).
- ACV coverage provides cash, based on the depreciated value of lost items (according to age)
- FRC coverage provides payment, based on the cost of replacing it (with a similar new item)
For example: Say you bought a formal dining set for $1,500 at a local furniture store. Today, it might be worth $300 resale. If you opt for ACV, your insurer will give you $300 for a missing/ stolen/ destroyed dining set. If you opt for FRC, your insurer will pay whatever it costs to get that same dining set today (it could still be $1,500 or it could be a lot more). ACV is obviously cheaper, but provides substantially less monetary protection for your losses. Be sure to consider your options here.
2. Gather and Compare Quotes – by gathering multiple quotes from competing insurance carriers, you will have a better sense of what your rental home policy could ultimately cost you. If you find that prices are generally affordable, you might consider lowering your deductibles or raising the limits of liability. In other words, beefing up your overall policy might be the best option. Be careful to pay close attention to the premiums, limits of coverage, exclusions and deductibles!
3. Ask for Multi-Policy Discount – most insurers offer a broad range of policy types. Check with your auto insurance provider first and see if they can offer you a Renter’s Policy as well.
4. Think about your Deductibles – if the quotes you receive are higher than you expect, consider raising your deductibles. The higher the deductible, the lower the premium! However, keep in mind that if you need to file a claim, your deductible must be met before the insurance company will compensate you for damages or losses. Higher deductibles should be approached with caution. Consult your insurance agent to find out what the best options are for you.
5. Consider a Security System – almost any security system will get you a discount on your premium, but the biggest discounts come from security devices that are directly connected to alert local police and fire departments automatically. Use deadbolts and window locks — reasonable tenant requests, which also help keep the cost of Renter’s Insurance down by reducing instances of break-in and theft. These are required on rental properties in the state of California, so be sure to tell your insurance agent if you have these features in YOUR home to receive a possible policy discount.
6. Don’t Skimp on Protection – it might be wise to bump up your liability protection to about $300,000. After all, if someone gets hurt on your property you might be liable for their medical bills, lost wages and other costs.
— Miss Lisa “Insurance” Doughty, PRANDI Property Management, Office Coordinator