Why You Need Renters Insurance

Your stuff isn't protected by your landlord's policy, so make sure you have the coverage you need.

By Cameron Huddleston, Contributing Editor, Kiplinger.com

October 11, 2011

Just because you're renting your apartment or home doesn't mean you're off the hook when it comes to insurance. Your landlord's property insurance policy will cover the building if disaster strikes, but it won't cover your belongings. That's why you need renters insurance.

This affordable insurance -- a policy costs less than $200 a year, on average -- covers renters against losses from fire or smoke, lightning, vandalism, theft, explosion, windstorm and water damage (not including floods), according to the Insurance Information Institute (III). If your home is damaged by a covered event and you have to live somewhere else, most policies will reimburse you the difference between your additional living expenses and normal living expenses. Plus, renters insurance helps cover legal costs if you're taken to court because someone is injured at your home.

If you don't have a policy -- 57% of renters don't -- here's a checklist from III to help you choose the right coverage:

Figure out how much coverage you need for your possessions. Create a home inventory to determine the value of all of your belongings (furniture, electronics, clothing, jewelry, etc.). A replacement-cost policy will pay to replace your possessions (up to the policy's dollar limit), whereas a cash-value policy will pay only what the items are worth when stolen or damaged. Expect to pay about 10% more for replacement-cost coverage. If you have expensive jewelry, collectibles or art, consider adding a floater to your policy to provide more coverage. Standard policies offer only a limited amount of coverage for these items. You'll need receipts or appraisals for items to be covered by the floater.

Understand the deductible. The deductible is the amount you'll pay out of pocket before insurance kicks in. The larger the deductible, the lower your premium. So if you can afford a $1,000 deductible, you'll cut your premium by as much as 25%, according to III. But considering how inexpensive renters insurance is, the savings might not be worth the large amount you'll have to fork over to pay a high deductible.

Know what disasters are covered. Although losses from fires, lightning, windstorms, theft, vandalism, explosions and certain types of water damage are covered, standard policies don't cover floods or earthquakes. You can get flood insurance through the federal government's National Flood Insurance Program, and check with your insurer about getting separate earthquake policy.

Make sure you get enough liability coverage. Most policies provide at least $100,000 of liability coverage (if someone sues you) and about $1,000 to $5,000 worth of medical payments coverage (which allows someone who gets hurt on your property to submit medical bills to your insurance company). If you need more than $300,000 worth of liability coverage, consider getting an umbrella policy for an additional $150 to $300 a year for $1 million worth of coverage (see Why You Need an Umbrella Policy).

Be aware of limits on living-expense reimbursements. Although most policies will help renters pay for living expenses if they have to live elsewhere as a result of property damage, insurers will either limit the amount of time they'll provide coverage or place a cap on the amount that they'll pay.

Ask about discounts. Many insurance companies offer a variety of discounts. For example, you might have to pay less if you have a security system, smoke detectors and deadbolt locks. Insurers also offer discounts to customers who have multiple policies with them, have good credit or are 55 or older. So be sure to ask about ways to lower your premium.
You can compare costs for different policies at Web sites such as NetQuote.com and InsWeb.com. If you have a roommate, ask whether the insurer will allow you to purchase a single policy for both of you (then you can split the cost).

Read more: http://www.kiplinger.com/columns/kiptips/archives/why-you-need-renters-insurance.html#ixzz1bEdbdCaR
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With Apartment Rents Rising, Will You Turn to Buying?

There are many opinions about the real estate industry and some inquire whether now is a good time to buy. The bottom line is everyone needs a place to live, renting or owning. And if renting becomes just as costly as buying, without some of the financial benefits, the question then becomes will you turn to buying?

According to the Real Estate Economy Watch, the rate of rent growth is significantly higher so far this year than it was this time in 2010. It is currently at a 5.17 annualized rate compared to 4.72 percent at this time last year. And, assuming effective rent grows at the same rate in the next four months as it did in 2010, the full-year total would fall just below the historic highs of 2000 (6.18 percent) and 2005 (5.81 percent)[1]. Although effective rents have increased 9.96 overall since December 2009, the past 20 months have shown effective rents differ by property class. Class A properties have increased 11.54 percent, Class B properties have increased 10.44 percent and Class C properties have increased only 6.74. Some of the top markets for annual effective rent growth are in Northern California, Texas, Colorado.

But as we questioned in our Home Sales Jump, But What Does that Mean for Real Estate Market article recently, home buyers are still struggling against a very tight credit market. So while only 23 percent of renters living in single family homes-where more than half the nation’s renters live today–believe that renting makes more sense than buying a home[2], the difficulty of getting financing will hold the other 77 percent back. According to the Real Estate Economy Watch, seventy-three percent of single-family renters say it would be difficult for them to get a home mortgage, with 33 percent citing their credit history as the biggest obstacle to getting financing.

“Survey data make clear the relationship between home purchase demand and concerns about the stability of employment. Dissatisfaction about the direction of the economy and related employment fears are damping demand to buy homes and slowing the recovery. People who believe owning is a better deal than renting are nonetheless planning to rent, at least until things improve it would seem,” said Doug Duncan, vice president and chief economist of Fannie Mae.

It appears that the debate whether to rent or buy is still a heated one and its now become much more than the traditional To Buy or Not To Buy type questions. So we will ask you, will you turn to buying with the increase in rental pricing?

October 17th, 2011 by Gillian Luce (Homes.com)

Buying a House: If You Can Afford it, Now Is The Perfect Time

Joshua Ritchie on January 5, 2011

We’ve heard a lot from politicians and journalists for the last two years about how bad things are. The economy is in the tank…. The housing market is flat. But is this really true for everyone? Of course not. Economics is not a one-sided subject where things are either great or terrible for everyone. There are two sides to every transaction. So, while today is probably not the best time to be selling a home, it might be the perfect time to buy a house if you can afford it.

Here’s why:
Housing Prices Are Low

First, and most obviously, this is a buyer’s market. Home prices are lower than they’ve been in years. On November 12, USA Today reported that median home prices had fallen in “almost as many areas as they rose” according to National Association of Realtors surveys. The national median home price of $177,900 was down 0.2% from its position during the third quarter of 2009.

While this is bad news for home sellers, it is actually great news for home buyers, especially first-time buyers. A young couple with the money for a down payment can take advantage of today’s low home prices – possibly buying more house than they could have afforded just two or three years ago.
Foreclosures

Another positive (as far as home buyers are concerned) is the still-high nationwide foreclosure rate. According to Amy Hoak of MarketWatch, foreclosures could peak in 2011. In an interview with Rick Sharga (a Senior VP for RealtyTrac), Hoak found that not only were there “about 1.2 million” bank repossessions in 2010, but also that there should be even more next year. “Continued higher unemployment” as well as “upcoming interest rate resets” that raise monthly payments for some homeowners are both expected to keep foreclosures coming.

To the aspiring homeowner, this is not a tragedy, but an opportunity. Banks are not in the real estate business and they do not want to own property. By acting quickly, you can purchase foreclosed properties (which usually have nothing wrong with them) from banks for substantially less than market value.
Low Mortgage Rates

Low mortgage interest rates also make buying a home attractive. While rates are no longer historically low (December 17th’s Wall Street Journal reported a rate of 5.09% for 30 year, fixed loans) they are still quite manageable for buyers with strong finances. In fact, rates are still lower today than they were twelve months ago.

Goldman Sachs economist Ed McKelvey added that “since the recent rate increases have essentially just undone the declines from earlier months, it is hard to see why sales should drop significantly further from current levels.” Furthermore, by locking in today’s rates, you automatically protect yourself from future increases (which are likely if the economy continues to improve).
Benefit From Market-Wide Improvement

There’s an old saying that when you’ve hit rock-bottom, the only way to go is up. This applies greatly to home buyers in today’s market. By buying when prices are extremely low, you are positioning yourself to reap the rewards later on, when the market inevitably improves. Which it will, because the housing market (like the economy itself) is cyclical.

No matter how depressing things may seem, they always turn around. Think about the Great Depression, the 1980′s stock market crash or the tech bust in the late 1990′s. All of these situations seemed hopeless at the time, yet every single one of them ended. In each situation, the winners were those who bought assets when they were cheap and hung on until they rose in value.
Motivated Sellers

When the economy is soaring, buying a home can be a hassle. After all, it’s a seller’s market. Why should they be in any rush to accept your offer and close the deal now when a much better one could be right around the corner? Instead, you’ll be forced to either move on to another property or wait while the seller evaluates other offers.

In a buyer’s market (like today’s) the situation is the opposite. Now, sellers are eager to accept competitive offers and move on with their lives. This means that you can get into your new house in less time and with less hassle than before.