Is Renter's Fire Insurance Coverage Standard Across the Industry?
Most people think that renter's insurance policies are the same no matter what insurance company they decide to use. This is not true; in fact, some insurance companies have significantly cheaper policies because the coverage is not as extensive as policies with higher premiums. Listed below are the ways that insurance policies differ from company to company.
1. Actual Cash Value vs. Replacement Value - Some insurance companies offer customers actual cash value while other companies offer replacement value. Actual cash value means that the insurance company gives the customer what the product is worth today. An example of this is when a policy holder buys a computer. He/she may have purchased it for thousands of dollars three years ago, but it is worth much less than that today. Actual cash value pays the customer the cost of that computer today.
Replacement value is preferred over actual cash value since insurance companies do their best to replace the product to the closest match. For example, if a customer claimed on a mobile phone that was purchased three years ago, the insurance company looks for a model that is similar in features, appearance, and price to the mobile phone damaged in the fire.
2. Accommodation Supplement - Some insurance companies include a feature in their policy where they pay for alternative accommodation if a house is damaged severely by fire. Some policies do not have this feature; check with your insurance company to see if accommodations are included in your policy.
3. Liability Cover - The amount of liability coverage in a policy varies from company to company. Renters should make certain that they have sufficient liability coverage to protect them if an injury or incident such as a fire occurs on the property. Without the liability cover in a policy, renters are liable to pay for the damage out of their own pockets.
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