Insurance coverage dictated by needs

Policies have similarities, but each contract requires its own outlook

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How much insurance you need for your personal property comes down to what you need to insure.

With cars, the insurer simply looks up a vehicle’s value and assigns it to the policy. In fact, auto policies typically don’t even state the amount of coverage for a vehicle — just the deductible.

A homeowner, on the other hand, needs to determine the amount of money it would require to rebuild the home if it were destroyed — and it takes a little more expertise to get that number right.

“Most homeowners pay more attention to auto insurance than home insurance,” said Robert Large, vice president of Pacific Specialty Insurance Co. in Menlo Park, Calif. “It’s understandable because auto insurers bombard consumers with TV advertising.

“Additionally, because most families have two or more cars, most spend more on car insurance compared to the typical home insurance policy.”

“We like to teach our customers to be better risk managers,” he said. “Losing a car will cause some pain, but you wouldn’t be financially ruined as you would if the house was destroyed and wasn’t properly insured.”

But the most underappreciated form of personal property insurance could be renters insurance.

Despite the fact that millennials (age 23 to 35) are renting in unprecedented numbers, the majority of them — 56 percent —do not have renters insurance, according to a survey commissioned by Nationwide Insurance.

“It’s clear that there’s a misconception among millennials about the importance of renters insurance and how much it really costs,” said Mark Hara, vice president of marketing for Nationwide Insurance in Columbus, Ohio.

The average monthly premium for a renters policy with Nationwide runs between $15 and $20 for up to $100,000 in coverage.

Since 2008, Nationwide said it has paid more than $184 million in renter’s insurance claims, averaging nearly $4,000 per claim.

Mr. Large said with a homeowners policy, there are several factors to consider when deciding the amount of coverage needed.

“The insurer should compare survey cost estimates with actual claim payments,” he said. “Also important is ‘guaranteed replacement cost,’ which comes standard in better policies. That assures there will be enough money to rebuild the house even if the cost exceeds the home insurance amount.”

While renters share many of the same risks as homeowners, they also have many of the same protections under an insurance policy.

A homeowners policy will protect the whole home, including the structure, contents and the people inside. Renter’s insurance protects the value of the contents of the dwelling and covers injuries suffered by people on the property.

Both homeowners and renters policies also protect possessions if they are lost or stolen outside the home, although neither extend to losses related to motor vehicles.

Most standard policies have limits for certain valuable possessions — such as jewelry, antiques, silverware, furs or fine arts — which need a so-called personal property insurance endorsement, or floater, to be included in coverage.


Tim Grant: tgrant@post-gazette.com or 412-263-1591.

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