Is rental insurance FOR YOU?

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We in the tropics know the severity of storm systems and the devastation they can wreak in the blink of an eye. Hurricane season is usually when discussions tend to resurface about the importance of insurance and making sure your insurance policies are up to date. And yet, we often remain chronically underinsured or uninsured at all, especially when it comes to home insurance.

If you’re new to home ownership or renting, there are a few things to keep in mind about insurance. Importantly, insurance is not just a formality that should be considered optional depending on the state of your finances; this is an extremely critical aspect of planning your personal finances and building your wealth, as it is essential to protect your assets in the event that something unexpected happens to you and your family. where you live. In other words, insurance provides (1) financial security and (2) risk mitigation.

If a severe weather event caused significant damage to your building or personal property, without the ability to file a claim, chances are your finances won’t be able to handle the costs and therefore delay your other financial dreams.

There are, of course, different types of insurance plans to cover the different types of risks you might face. Life insurance policies cover the risk of premature death; health insurance policies, on the other hand, cover medical emergencies; car insurance covers the risk of road accidents or theft of your vehicle; and travel insurance plans cover travel-related contingencies. What interests us here is the insurance that covers damage to the house and its contents. There are two main categories: owners and tenants.

home insurance

Home insurance aims to cover the cost of the building itself and any associated structures, such as a garage, tool shed or toilet, in the event of damage caused by the weather. When taking out a mortgage, the homeowner is usually required to have one and the policy must be paid for a claim to be settled. The amount of insurance generally covers both the cost of replacing the home in the event of a total loss and any property the homeowner has inside.

Tenant insurance

But what if you can’t afford to buy a house yet? Tenants insurance, as the name suggests, is insurance taken out by someone like you who rents premises, so it covers the tenant and their personal property inside the building. Some renters think that their landlord’s home insurance is all that matters. But if the personal property inside the home is yours and not the owner’s, you are solely responsible for insuring your property.

So if you rented the house furnished i.e. everything inside like tv, stove, air conditioner etc should be covered by the insurance policy owner’s dwelling. If you rented the house unfurnished, if there is any damage to your personal property, it is your responsibility. If a hybrid situation exists and the house contains part of the owner’s property and part of yours, only the things that belong to them will be covered by the home insurance; your belongings will need to be covered by renters insurance.

Why renters insurance is important

Remember that tenants insurance, unlike landlords insurance, has the added benefit of smaller premiums, if you are worried about not being able to pay your rent as well as a tenancy policy premium. Plus, it’s not just for hurricane damage; Renters insurance also covers the theft of your personal property, liability damage to, for example, workers or even guests, etc. In some cases, it may even cover additional living expenses if you have to move temporarily.

The focus is usually on homeowners insurance, but if you’re a renter, you need to know what liability you have. Suppose the building you are renting is older and the landlord has finished paying the mortgage. An older building, remember, is more vulnerable and susceptible to weathering. But it’s entirely possible that they’ve let their home insurance policy expire if they’re in financial difficulty, especially if the owner is a retiree.

At the end of the line

While we know there is always a high demand for rental homes and apartments, as a tenant it is always a good idea to consider the insurance status of where you wish to reside. The landlord usually has an interest in the person who wants to live in their house, but you also have a right to know about the house they are trying to rent to you.

Lamar Harris Vice President, Wealth Management, NCB Capital Markets

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