How To Buy Renters Insurance
There are many kinds of Renters Insurance, Home Insurance, Rental Car Insurance, Boat Insurance, Rental Equipment Insurance, and more.
We will first talk about renting a home and keeping it insured. People who buy insurance for rentals don't own the structure, but they want to insure their personal property inside the structure. They are most concerned about their most prized possessions. That fear of being ripped off is what causes most people to buy renters insurance. To replace items they have spent their life trying to earn and have worked hard for, and to have someone break in and take it all is a dreadful thought.
How To Value Your Belongings One of the most common mistakes people make in a renters policy is when they under insure their belongings. They usually buy $10,000 or $15,000 of coverage but could never replace everything they own.
Total up the value of all your major items, such as furniture, appliances, stereos, televisions, pillow top bed, dressers, also any major tools you keep at the house etc. and then double that number and that will take care of the rest of it such as clothing, dishes, silverware, towels, and other misc. items.
Here are a few items that are easy to overlook; Sporting equipment, ski equipment, biking, hiking gear, etc.
Always buy the optional replacement cost coverage so that, in case of a major loss, the Renters Insurance Company will pay you enough to replace everything brand new. If you don't, they are allowed to pay you a depreciated value for all your possessions.
Important Renters Insurance Note: If you file a claim on your personal auto insurance policy for an accident you cause with a rented car (which may be more likely because you are driving an unfamiliar car in an unfamiliar location), your current auto insurance company may mark you as a higher risk driver. The result is an increase in your auto insurance premiums. It may be better to pay for rental car insurance if it's only for a few days rather than risk years of higher auto insurance premiums.
Which insurance is better?
Let's Look At Your Auto Insurance
If you have auto insurance, most coverage types with its deductibles, usually applies to rental cars as well.
Let's say you purchased collision coverage, it will cover damage you cause to any auto that you're driving. However, many auto insurance policies say that your collision insurance is "excess" to any other coverage, meaning that any coverage you buy from the rental car company kicks in first. This eliminates a lawsuit between the Renters Insurance company and the rental company. Don't forget that your own collision insurance requires you to pay a deductible before the insurance company picks up the tab.
Your comprehensive coverage will likely apply to any rental car you drive and will generally cover fire, theft, vandalism or animal collisions. Again, your own comprehensive coverage is excess coverage and is subject to your deductible.
With Renters Insurance, if you cause an accident, your liability insurance will pay for the damages that you cause to someone else, plus any medical expenses that arise from your negligence. Your liability insurance will cover you up to the limits of your written policy, and if you were driving a rental car at the time of the accident, your personal auto liability insurance, like your comprehensive and collision, will likely be excess coverage. Which means the rental insurance was unnecessary, but I refer you to theImportant Renters Insurance Note:
Your credit cardYour own collision coverage is "excess" to any other coverage.
Many credit card companies offer rental car insurance benefits for free if you charge the cost of the rental on your credit card. If it's not free, your credit card company may offer a cheaper deal than if you purchased it at the rental counter. However, the Insurance Information Institute (III) recommends that if you choose insurance offered by a credit card company, ask to have the details of your coverage sent to you in writing. Credit card insurance coverage varies greatly from company to company. Some credit card policies cover only damage to your rental car but not to other cars. Others do not offer personal liability coverage for bodily injury or death claims. Do your homework.
Rental car company's insurance, or Renters Insurance
Rental car companies sell various types of insurance and waivers that broaden your liability protection and relieve you of the responsibility of paying for a wrecked rental. Generally on the expensive side.
Loss damage waivers (LDW and collision damage waivers (CDW) from the rental company essentially take the place of your own collision and comprehensive insurance, letting you off the hook if the rental is stolen or vandalized, or if you crash it. Some LDWs include the CDW, and some waivers require you to pay a deductible, just like your comprehensive and collision insurance. So be careful. According to III, your coverage may become void if the accident was caused because you were speeding, driving under the influence or some other reckless error on your part. This can lead to a serious debt problem.
These waivers are not an insurance product because they're not underwritten or sold by an insurance company. This is also part of the expense of it. It's the rental car company's version of comprehensive and collision insurance. If you already have comprehensive and collision insurance for your own car, I wouldn't duplicate coverage I already have. But if you've dropped your comprehensive and collision coverage or don't have auto insurance, it's worth the money. According to III, this coverage generally ranges from $9 to $19 per day.
There are also Additional Liability Insurance supplements. If you are concerned about your own auto policy having low liability limits, you can purchase extra coverage for between $7 to $14 per day, according to III. It will often cover you for up to $1 million if you cause an accident, damage property or injury to others. If you purchase this insurance from the rental car company, it becomes your primary liability insurance. Your own personal car liability insurance is, again, relegated to excess-coverage status or over insured. However, III suggests that buying an umbrella policy may be a lot more cost-effective.
A rental car company also may offer you accidental death and personal property insurance, for a small fee of course. For example, the Avis rental car company offers Personal Accident Insurance (PAI) that provides accidental death benefits and medical expense benefits to the driver and all passengers. Avis' PAI provides $175,000 in accidental death coverage, $2,500 in medical coverage for injuries due to an accident and $250 for ambulance expenses. (The Limits in New York area are different.)
Most rental car companies also offer "personal effects" coverage for your personal property that might get stolen out of the rented vehicle.
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