Renters and Condo Owners Often Skimp on Insurance Coverage for Belongings and Forced Relocation
Many renters and condo owners are taking unnecessary risks by shortchanging themselves on insurance coverage, says Mark Carrasquillo, an agent with E.G. Bowman Company, an independent insurance agency in New York City.
Renters insurance and condominium insurance both cover your personal property if it’s damaged or destroyed by a fire, water leak or windstorm, or is stolen or vandalized, whether in your apartment or elsewhere. The amount of coverage you have on your belongings is called the contents limit. You determine that amount, he says. But how much do you need?
“Many individuals only think about their big-ticket items: their TV, computer, stereo and furniture. They overlook the little things like their clothes, shoes, linens, toiletries, kitchen utensils, dishes, books, CDs, and sports equipment,” Carrasquillo says.
He says to imagine you’re moving to a new apartment and all of your possessions are in a moving van. It crashes over the side of a bridge and plunges to the bottom of the river. How much would it cost replace everything you own?
“When people take the time to think about it, their initial estimate of $5,000, $10,000 or $20,000 suddenly becomes $50,000, $75,000 or more,” he says.
It doesn’t cost a lot more to raise your contents limit to give you full coverage in case the worst happens. And higher contents limits also give you another benefit: greater "loss of use" coverage, Carrasquillo says.
“It’s a key built-in coverage that’s overlooked by customers and, unfortunately, even by many agents,” he says.
Loss of use reimburses you for the cost of living elsewhere if your apartment becomes uninhabitable because of a fire or other covered loss. The limit is usually 20 percent of the contents limit. So, if you have $60,000 in contents coverage you should automatically have $12,000 in loss of use coverage. This coverage can be increased, but it’s rarely even discussed, Carrasquillo says.
He recalls a client who rented an apartment in one of the outer boroughs of New York.
“A major fire forced the homeowner and the tenant to relocate while repairs were made. The homeowner had more than enough coverage to cover the cost of renting an apartment and living elsewhere. However, it was a struggle for my client, who could not rent a similar three- bedroom apartment. The loss of use limit of $12,000 barely covered the cost of a one-bedroom apartment for the time the eight months he was displaced. Now I always discuss this coverage with clients.”
The loss of use limit should realistically cover the cost to relocate in a similar-size apartment or unit in the same area for up to a year, he says.
“Think about the cost to replace all of your possessions and also about the cost to relocate and buy your coverage limits with that in mind,” Carrasquillo says. He can be reached at firstname.lastname@example.org.
Based in Manhattan’s financial district, E.G. Bowman offers all types of commercial and personal insurance, surety bonds and employee benefits. Its clients include Fortune 500 companies, midsized and small businesses, government, nonprofits and individuals. It taps domestic and international insurance markets for both standard and specialized coverages. More information about E.G. Bowman is online at www.egbowman.com, www.facebook.com/egbowmanco and www.twitter.com/egbowmanco.
Media Contact: Henry Stimpson, Stimpson Communications, 508-647-0705, HStimpson@StimpsonCommunications.com