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Personal liability protects you against a claim or lawsuit if someone is injured in your home. A renters’ policy typically automatically provides $25,000 in liability coverage and pays your legal costs. Extra liability coverage is available for additional premium.

If a policy provides less coverage than you’d like, ask whether you can buy “endorsements.” Endorsements increase or expand the coverage provided in the base policy, usually for additional premium. The availability of endorsements varies by company.

Renters policies normally pay the “actual cash value” of your property. This means the insurance company will subtract an amount for depreci- ation and wear and tear from the value of your property before paying your claim. For example, if someone steals your five-year-old television, the insurance company will only pay you an amount equivalent to the market value of a five-year-old television, minus your deductible. Therefore, you won’t receive enough to buy a new TV like the one that was stolen. For a higher premium, you can buy “replacement cost cov- erage” that pays the full cost of replacing your propert , minus your deductible and up to your policy’s dollar limit. You can usually add replacement cost coverage to your property for additional premium.

If you have replacement cost coverage and an HO-BT or HO-CT policy, your insurance company will pay up to $1,500 to repair or replace your damaged property. If the property damage exceeds $1,500, the company will pay the actual cash value first. You must then repair or replace the property with an item of like kind and quality before the company will pay the remaining amount of your claim. Other types of policies may pay replacement cost differently. Read your policy or ask your agent to find out how your policy pays a claim.

Note: A complete inventory of your personal property can be helpful if you ever file a claim. Include the item, its value, and a serial number if there is one. Keep receipts for expensive items. Photographs or a videotape of your property can be especially helpful to document your loss to the insurance company. Keep a copy of the inventory and any photos or videos of your property in a secure place, such as a safe deposit box.

Rates can vary widely among companies, even for the same or similar coverage. It pays to shop around. Following are a few tips to help you shop:

  • Inventory your property so you know how much coverage you need. Make sure you buy enough coverage to replace your property if it’s stolen or destroyed.

  • Get quotes from several different companies.

  • Ask about endorsements if you need or want more coverage than the policy provides.

  • When comparing prices, be sure you understand the coverage each policy provides. A less expensive policy could provide less coverage.


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