In the last blog, I discussed the nuts and bolts of renters insurance and how affordable it is… so there’s no excuse not to have it! And while renters insurance can be very helpful, if you don’t know how to use it, it can end up being a tremendous headache.
We have seen a lot of renters insurance policies over the years and no two are alike. They vary in the amount of coverage, time limits, deductibles, and how easy (or not) it is to work with the insurance adjuster. Knowing to ask the right questions is key, so Our Front Porch created a questionnaire for our clients to use so they can figure out exactly what is covered and what is not covered. Anyone can download the free questionnaire here. It’s a great tool to use before disaster strikes to help you understand if you have adequate coverage.
Insurance companies have their own language and they aren’t known for going out of their way to help you understand your policy. After all, they are in business to make money, not to make sure you get the biggest payout. There are typically two types of coverages offered under a renters insurance policy: Personal Property and Additional Living Expenses (ALE). Understanding the difference between the two is key:
- Personal Property covers your belongings that are lost or damaged in a disaster – furniture, clothes, electronics, household items, etc. Most policies cover $20K of personal property. Start adding up the cost of everything you own and you will quickly realize $20K won’t replace every item. Personal Property also typically covers any cleaning/decontamination of your items, moving your things to storage, and then moving them to your new home. It’s good to keep all these expenses in mind, because that will come out of your $20K.
- Additional Living Expenses covers any costs, above and beyond your normal expenses, that you incur from being displaced from your home. The big one is temporary living expenses – hotels, short term rentals, etc. The insurance company will usually expect you to pay your typical monthly housing payment and then they will cover the difference. Additional expenses like transportation, food, and other expenses above and beyond your normal may also be covered.
The more you know, and the sooner you start asking questions of your insurance adjuster, the better off you will be. Remember, dealing with insurance companies is not a skill we all have. When you do need to file a claim, the learning curve will be steep. Don’t hesitate to reach out for help.