Home/Renters – FAQs

Home/Renters Insurance

 

Why does the coverage on my homeowners/renters policy keep going up every year?
Once the replacement cost of your residence is determined (in the case of a renter, the personal property limit) the home insurance company updates the replacement value each year based on the (building cost) inflation factor for your particular zip code. We are starting to see large increases in the cost to build and rebuild homes for our Santa Monica homeowners and other areas as well. Let us review the current building cost estimates to determine if you are properly insured.

The replacement value of a home has little to do with the market value of the home. The inflated California real estate market has once again created a situation where the market value of a home may far exceed the cost to rebuild the home.

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Why do I need renters insurance?
Whether you’re renting an apartment, home or condo, renters insurance provides valuable coverage for you and your belongings. A renters policy protects your personal property against fire, theft or damage and may pay for temporary living expenses if the residence is damaged. It also provides liability coverage in the event you are sued for bodily injury or property damage (non-vehicle related).
Even though the property owner or property management company has insurance, their policy does not cover you or your personal property.

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I have a roommate; do we both need renters insurance?
A standard renters policy covers you and relatives that live with you. If your roommate is not a relative, each of you should have your own policy to cover your own personal property and provide liability coverage for your own actions.

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I received a letter from my mortgagee saying that they didn’t get a copy of my policy. Don’t you send a copy of my policy to them?
“Mortgagee” copies of insurance policies are usually sent directly by the insurance company to the lender. Unfortunately, lenders tend to change addresses frequently or they sell the loan to another lender and fail to notify the insurance company.
We suggest that if you receive a notice from any party wishing evidence of your insurance, that you mail or fax a copy of the request to our office. We will send a copy of the request along with the evidence to your lender.

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I am thinking of canceling my earthquake coverage but I’m afraid of what would happen if a fire started as a result of an earthquake. Would I have coverage?
YES. According to most insurance company adjusters, if a fire started as a result of an earthquake and you didn’t have earthquake coverage on your home, the home insurance company would pay you for the damage to your home after the earthquake but before the fire.
In practical application, it would be very difficult to tell what condition your home was in if it burned to the ground.

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How do I determine the value of my personal property for a renters policy?
Walk from room to room in your home or apartment and list the values of the most expensive items in each room. Estimate what it would cost for you to replace the items today. Then, total your costs from each room. This should give you a good starting point.

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Am I covered if my personal property is stolen from my car or my hotel room if I’m on vacation?
Your homeowners/renters policy provides worldwide coverage for your personal property. However, there may be limits for certain types of belongings (i.e. jewelry, cash and watches). Please contact our office or refer to your policy for limitations.

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What is the difference between “actual cash value” (ACV) and “replacement cost”?
When a loss is paid using ACV, the policyholder is entitled to the depreciated value (the cost to repair/replace the property less depreciation) of the damaged property. When a loss is paid using replacement cost, the policyholder is entitled to the amount necessary to repair/replace the damaged property with one of “like kind or quality” at current prices. We recommend you always carry replacement cost coverage for your dwelling and/or personal property.

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How are the coverage limits determined on my homeowners policy?
In most cases, the dwelling limit (coverage A) on your policy is used as the basis in determining the rest of your coverage limits. On a basic homeowners policy, the remaining limits are calculated as follows:

Other Structures (coverage B) 10% of coverage A
Personal Property (coverage C) 70% of coverage A
Loss of Use/Addt’ll Living Expense (coverage D) 20% of coverage A
Liability (coverage E) usually $100,000; $300,000 or $500,000
Medical Payments (coverage F) usually $1,000 or $5,000


These percentages can vary by carrier. Please contact our office or refer to your policy for specific information.

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What is the difference between an “all risk” policy and a “named peril” policy?
A named peril policy provides coverage for losses that are due only to the covered perils listed in the policy. An all risk policy provides coverage for losses due to any peril except those that are specifically excluded in the policy. An “all risk” policy provides much broader protection than a “named peril” policy.

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What is loss assessment coverage?
If you own a home or condo and are a member of a homeowners or condominium association, this coverage is especially important to you. Homeowners/condo associations have the ability to charge (assess) each property owner fees to cover losses to common areas or to meet the association policy deductibles. In the event you are assessed as a property owner, the loss assessment coverage can be used to meet that obligation. Typically, policies include $1,000 or $5,000 of loss assessment coverage; however, this limit can be increased to as much as $50,000.

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