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WHAT RENTERS INSURANCE COVERS IN A FIRE

Many people wonder what renters insurance covers in a fire. One of the biggest worries among renters concerning loss of valuables is the risk of fire. This can be a devastating event that can completely wipe out the entirety of your belongings. If not ravished by flames, smoke and water damage are sure to destroy any items remaining. Fortunately, a comprehensive renters insurance policy can help make you whole again after experiencing such loss. 

Renters insurance protects against the financial hardships caused by the personal property lost due to covered events such as fire, natural disasters, theft and vandalism. Generally, a renters insurance plan will cover 16 such instances. For these qualified events, a renters insurance policy will typically cover the replacement of valuables up to the dollar amount specified by the policy owner. This amount is usually between $20,000 and $40,000. However, there are two types of replacement policies to choose from that will drastically effect the outcome of your renters insurance claim.

The two types of replacement policies are Replacement Cost Policies and Actual Cash Value (ACV) policies. An ACV policy covers the value of the possessions at the time of the qualified event as where a Replacement Cost Policy will reimburse the policy owner for the full replacement of the lost items by their current value. This is an important distinction

To illustrate how crucial this seemingly small difference is, here is an example. Let's say you purchased a laptop three years ago for $2,000, but today it is only worth $500. However, if you had to replace the laptop today, it would cost you much more than $500. An ACV policy would only pay out the $500 value of the laptop as where the Replacement Cost Policy would pay enough to buy a comparable laptop in today's market, which is likely to be a cost much closer to the $2,000 mark.

Consider how much you paid for all of the items in your home and how much they have depreciated since your purchase. As in the example of the laptop, could you afford to replace even a fraction of your valuables with only an ACV policy? Think about your belongings. Do you own computers, laptops, cameras, iPods, DVD players, TVs, mp3 players, video game consoles, stereo systems, cell phones and other electronics or high ticket items? How about furniture, art, lamps, tables, bedroom sets, toasters, blenders, microwaves, and other kitchen or household wares? Or personal items such as jewelery, clothing, shoes or expensive products or prescription medication?

Do a home inventory to figure out what the value of your belongings are so you can accurately choose the replacement amount, plan and deductible that are right for you. Making a home inventory can be quick and easy - and even fun! Go from room to room in your home and make a record of all of your belongings. Don't look over the small items as these can all add up to big dollar amounts if they need to be replaced. You can make a list with a word document or just a piece of paper and pen. Take photos, use a video camera and save receipts. These will all be of great help should a claim ever need to be made.

Make a fire-safe file with your record of belongings. Email or send your documented, itemized list and images to a friend. Store a copy outside of your home or in a fire-retardant file cabinet or archive it with an organization that ensures safety of such belongings. Include backup discs or copies of irriplacable family photos, videos and memorabilia that can not be replaced in these locations - even the most comprehensive renters insurance policy cannot replace these items. Be sure to update this record annually or whenever you make a big ticket purchase.

Another area that is covered by most home renters insurance plans, especially in case of a fire, is "additional living expenses." In case of a fire, burst pipes or other reason covered by your policy where your home is unlivable, you will be reimbursement for costs of living if temporary housing is needed during reconstruction.

In short, what renters insurance covers in a fire, is just about everything you need to help be whole again after such an event. Depending on the policy you choose, you will be given enough money to replace your items or be giving the value of your items. You will be provided with additional living expenses if your home is unlivable while under construction. In addition, you will be provided with the peace of mind that, should you experience such an event, you have the protection you need against financial devastation.