It is typhoon season. Those affected by natural calamities do not only have to cope with the death or permanent disability of loved ones, but also with the destruction of property.
In terms of damage to property, homeowners can fall back on insurance, but how about people who are only renting their places of residence?
Jason Alderman, in the weekly column “Practical Money Matters,” says people who do not own their homes should also get insurance for personal possessions against both natural and human-made disasters.
The financial expert, who directs “Practical Money Skills for Life,” a free award-winning financial education program, says, contrary to many renters’ expectations, “Landlords typically only insure the building and any fixtures they own…”
The landlord’s insurance, Alderman says, will not cover the renter in case of accident, burglary, or other disaster. In view of this, renters need their own insurance.
Alderman, who directs Visa’s financial education programs, offers some tips on choosing the right coverage. The first question to ask is what is covered by the insurance. Will coverage include property that is lost, damaged, or stolen due to occurrences like fire, explosions, smoke, vandalism, theft, plumbing leaks, electrical surges, or falling objects? Insurance should also cover damage or loss from flood, typhoons and earthquakes, among others.
Alderman suggests cataloguing everything you own—furniture, clothing, electronics, jewelry, art, and other collectibles, books and CDs, sports equipment, etc.—and how much it would cost to replace them.
“To settle claims faster and verify losses for tax purposes, save receipts and photographs or videotape everything; then store copies in a safe deposit box or other offsite location,” he suggests.
He also advises comparing payout options. Alderman says, “‘Actual cash value’ (ACV) coverage pays the amount needed to repair or replace your belongings, minus depreciation and your deductible, while ‘replacement cost’ coverage pays the amount needed to replace the items … minus deductible.”
ACV will pay only what the used appliance is worth today, while replacement coverage will pay enough to buy a comparable new item. Alderman says while replacement cost coverage is slightly more expensive, it is often worth it.
Personal liability coverage protects you if someone files a claim alleging you caused them bodily injury or property damage. Loss-of-use coverage will help you when you have to vacate your present residence.
“Many policies pay an allowance for housing and living expenses if you’re forced to move out temporarily. Check whether this coverage is included or costs extra and what the limits are,” Alderman says.
For the full article, log on to www.practicalmoneyskills.com.
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