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Protect your home, ensure lesser losses with renters’ insurance

Dubai: Preparing your finances for in case of natural disasters is smart. Having cash on hand, access to credit and the right insurance coverage can help you get through tough times. It also can be a good investment. But not everyone can make these preparations.

“People with the fewer resources often suffer the brunt of disasters. But anything you can do to bolster your situation now could help you limit the toll,” explained Ian Bagley, an insurance analyst based in Dubai. “This includes keeping cash aside for emergencies, and an insurance handy for the long run.

“While consumer insurance advocates advise setting aside at least $2,000 (about Dh7,500) for your immediate needs, you may need more in the off chance any disaster-induced damages are extensive. This is why renters’ insurance isn’t one worth skipping out on. ”

Here are five good reasons why you need renters’ insurance:

Reason #1: Protection against any damage-induced losses

A common renters’ misconception, Bagley added, is the belief their landlord’s property insurance will cover any damage-induced losses. But recent insurance surveys revealed nearly 70 per cent of renters ages 23 to 35 spends $5,000 (Dh18,365) to replace their belongings if a disaster did occur.

The survey also showed that a majority 56 per cent of the surveyed renters didn’t have renters’ insurance. A standard insurance contract, referred to as renters’ insurance, which provides the necessary protection for your personal property against covered perils, including fire, flood and vandalism.

“A best practice is to look for a policy that provides 100 per cent ‘replacement cost’ protection, which may be a bit more expensive — but ultimately worth it,” said Anil Pillai, a UAE-based consumer banking and insurance sector analyst.

“If you have ‘replacement cost’ insurance, your claim will cover the lesser cost of restoring items to their original condition or buying new items of like kind and quality to the ones lost, meaning there will be no deduction for depreciation.”

When do you opt for ‘floater insurance’?

Another best practice, Pillai added, is if you have expensive imported furniture, or are an early adopter of all things high-tech, investigate ‘floater insurance’ to get the necessary higher-limit coverage that you need.”

(What is floater insurance? It is a type of insurance policy that covers personal property that is easily movable and provides additional coverage over what normal insurance policies do not.)

Reason #2: Additional protection covers, away from home

A lot of times the renter’s insurance is paired with coverage for personal items you generally carry with you outside the home. These items can include, but are not limited to clothes, watches, mobile phones, jewellery, and laptops.

“Bear in mind additional coverage for any renter’s insurance might bring a considerable increase in the insurance premium. So, if you’re looking for basic rental home insurance, it’s best to look for flexible plans that can be customised as per your requirements,” added Bagley.

“Most renters’ insurance policies provide protection for your items within your property, meaning it’s covered when you’re in the vicinity of your home. There are other perks depending on your policy, like your items may also be covered in case of loss outside the premises of your home.”

So, check with your insurer to learn more about applicable coverages and limitations. For example, if you store many items in a storage facility for part of the year, you should ask about extended coverage.

Reason #3: Protection against loss of depreciation

“A key perk of having tenant’s home insurance, otherwise known as the renter’s insurance or rental insurance, is the tenant’s liability cover. This insurance cover protects tenants against rental property damage and wear and tear that may cost them their security deposit refund,” added Pillai.

“This helps if you’re living in a furnished rental apartment or villa, where the landlords deduct any damage to property from the tenant’s security deposit. When you, as a tenant, have tenant’s liability coverage, you can claim for any accidental damage to the landlord’s furniture, fixtures, or fittings.”

This damage may be caused by an accidental fire, flooding or water leakages that happen in the property in your presence or absence. However, these damages, if not covered with insurance, can cost the tenant a fortune and result in a complete loss of their security deposit.

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Reason #4: Affordable monthly price for overall protection

“The average renters’ insurance policy cost starts at Dh50 per month for Dh100,000 of property coverage, with a deductible (what you must pay out of pocket) ranging from Dh2,000,”explained Bagley. “However, lower prices are possible.

“Check for additional potential savings for having certain security or fire-prevention systems, bundling with existing car insurance policy, or staying claim-free for a time. So, when signing up for a renter’s insurance policy, you’ll have to select your coverage amount.”

That means you’ll have to decide up to what amount you’ll want your insurance policy to cover, added Bagley. As previously mentioned, renters’ insurance coverage for your apartment spans a few areas. For each area, you can select a different amount.

Reason #5: Insurance opens choice of rental opportunities

Advisors add that by investing in renters’ insurance, you also expand your options when looking for apartments. “More landlords are requiring renters’ insurance from their tenants. In the last few years, statistics show a steady increase in the average premiums for renters’ insurance,” added Pillai.

“A landlord can only legally require tenants to carry renters’ insurance when signing a new contract or renewing an existing lease. By shopping in advance for an adequate policy, you can have leverage to prevent a rent increase — or be ready to find a new and better place.”

How do I get renters’ insurance?

• Know what’s covered: As listed out in the above three reasons, renters’ insurance can be broken down into three main coverage types: personal property coverage, liability insurance and additional expenses.

• Calculate your coverage amounts: The second step is to figure out how much renters insurance you’ll need. Here’s where that home inventory will come in handy. You can adjust your additional living expense and liability coverage as needed.

• Compare insurance quotes: You can get free quotes at a renters’ insurance company’s website or by using a comparison site that can generate multiple quotes at once. If you prefer to speak to someone, an independent insurance agent can help you out.

• Apply for the policy: When you found the coverage you need and an affordable price, apply for it. You can apply for a policy on most insurance company websites. If your application is accepted, you can make your first payment and have coverage on the same day.

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