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How Much Renters Insurance Do You Need?

How Much Renters Insurance Do You Need?

One of my clients recently sold her home in McKinney and moved into an apartment. The decision for her was easy, she’d rather pay rent than deal with the cost of a home’s upkeep. The big question we needed to work through was how much renters insurance does she need? She is, after all, downsizing and won’t have as much stuff, or personal property, as she has in her home. Here’s how we approached. I began the discussion with contrasting the difference between a homeowner’s and a renter’s policy. All homeowner’s policies will contain some level of personal property or contents coverage. This is usually a percentage of the amount of coverage on the home. For example, a home insured for $200,000 may have anywhere from $80,000 to $140,000 in contents coverage based on the percentage the insurance company uses. When it comes to renter’s insurance, there’s no such percentage of coverage since there is no coverage for the home, duplex, condo, or apartment. The main thing the renter’s policy is concerned with is the amount of coverage required to replace their personal property. That’s when the prospective client asked how she should go about determining the value of what she has. It’s an excellent question and one many renters ask depending on their life situation. I suggested she stand in the middle of each room and make a list of all the furniture, electronics (TVs, computers, smart phones, tablets, etc.), throw rugs, and decorative items. Include clothing, linens, seasonal decorations, dinner and cookware, glasses, and even items in the cabinets, pantry, and refrigerator. Also include any lawn and garden equipment if that’s applicable. Think about what you paid for the larger items such as a sofa, side chair, bed, dresser, or TV. Assign a value to each item either based on what you paid for it, or if a gift, what it may have cost the giver. Check stores and websites where you shopped to replace items you purchased new, and garage sales, thrift stores, and Craigslist for items you may have purchased used to help determine a value. The goal is to determine what it would take to replace everything if it were lost in one event such as a fire or tornado. While you’re at it, take pictures of each room and its contents to create a home inventory (see http://wiseinsurancegroup.com/do-you-have-a-home-inventory/ on how to create one and why). Once you have everything totaled, or have created a rough estimate, use that as the amount of coverage needed for your renter’s policy. If you’re just starting out, you may only have a $5,000 to $10,000 worth of personal property. Some insurance companies...

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Car Insurance and Delivering Pizzas

Car Insurance and Delivering Pizzas

I wrote a car insurance policy for a friend’s son last year. It’s an interesting story that’s worth retelling because most people aren’t aware that many car insurance companies won’t write a policy if you or one of your kids does this. You may surprised by this too! A friend of mine called me last week to ask me about his son and their policy. They have their car insurance with a company headquartered in Texas and he’d just been told they would not cover his son’s car because of the job he has. The son deliver’s pizzas for a franchise owner of a national chain. My friend wanted to know whether any of the carriers I represent would cover his son as a pizza delivery driver. I called underwriters at all my companies and found out something most parents, and many agents, aren’t aware of. Most car insurance companies will not extend coverage on a personal policy to someone who’s a delivery driver regardless of whether they are delivering pizzas, sandwiches (think Jimmy John’s), or anything else (UberEATS, Grubhub, trycaviar, DoorDash, etc.). The lone exception is Travelers. They will extend coverage if the driver is in high school or college and delivers pizzas a couple of times per week during the summer vacation between the spring and fall semesters. They will not, however, extend coverage if this is a full-time summer job. Progressive will not extend coverage on a personal car insurance policy though they will write a commercial policy for a delivery driver. In this case, the delivery driver needs to be on their own policy apart from anyone in the household who’d not a delivery driver. I quoted a commercial policy for my friend’s son, but the rate was more than $3,000 a year. That’s expensive coverage for someone making minimum wage and tips. Aside from the expense of having appropriate insurance coverage for what many view as a part time job, there’s a very interesting question we should ask. What would happen if someone’s high school or college student were involved in an accident while delivering pizza to one of the shop’s customers? Would your car insurance policy cover the accident? There’s no clear answer here. Some companies may cover it and then inform the client they will not cover a delivery driver in the future. They may cover the accident and then cancel the policy, or they could deny the claim leaving the driver and possibly the family to pay for damages on their own. None of these potential scenarios are great options and should serve as a red flag to any parent whose son or daughter wants to...

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