Personal Finance / Unit 8: Insurance and Risk
8.5 Renters and Homeowners Insurance
Notes
Renters insurance covers your belongings and liability. Homeowners insurance covers the building as well. Lenders usually require homeowners insurance.
- Covered events (named in the policy) often include fire, theft and some storms. Floods and earthquakes often need separate coverage.
- A landlord's insurance does not cover a tenant's belongings.
- Actual cash value pays the depreciated value of items; replacement cost pays to buy new ones. Replacement cost is usually pricier.
- Keep a list or photos of belongings (a home inventory).
- Example: $8,000 of belongings are stolen and your deductible is $500. The insurer pays $7,500.
Practice
A tenant's laptop is stolen from the apartment. What typically covers it?
Landlord policies do not cover tenants' belongings.
Which option pays enough to buy a new item rather than the item's reduced value?
Replacement cost pays current prices for new items.
Fire destroys $12,000 of a renter's belongings. The deductible is $1,000. The insurer pays the rest. How much does the insurer pay?
$12000 - 1000 = 11000$.
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