Real Estate Matters

For Rebound Renters, a Few Things to Remember

By Ilyce R. Glink with Samuel J. Tamkin
Saturday, August 2, 2008

Foreclosures have doubled over the last year, which means a lot of former homeowners are becoming renters again for the first time in a long time.

And there are new lessons to learn: You're not quite the master of your own domain, because you lease the property instead of owning it. You have to live by the landlord's or building's rules and regulations. And you have to remember to change your insurance coverage.

It's easy to remember that when you own a property, you need to budget for homeowners insurance. Your mortgage company requires you to buy an insurance policy when you buy a home, or you will not be allowed to close.

But there is no one to remind a renter that renter's insurance is just as important, although much less expensive.

Approximately 87 million Americans rent, and Harvard University's Joint Center for Housing Studies predicts another million former homeowners will join them this year. Just 40 percent of renters have renter's insurance, according to a new survey by Allstate.

Why don't renters buy insurance for the contents of their home? The Allstate survey found that 43 percent haven't made time to look into it; 33 percent believe that coverage is too expensive; 23 percent believe they don't have enough valuables to make insurance worthwhile; and 10 percent believe landlords are responsible.

It's easy to be fooled into thinking your stuff doesn't have value. Typically, college students move up into the world with hand-me-down furniture. But, in fact, television sets, computers and even hand-me-down furniture have value, and a theft, fire, flood or other catastrophe can leave renters in the lurch.

The typical renter has $30,000 worth of contents -- but renters typically undercount their possessions. Like homeowners, renters need to take an objective look at their belongings and think about how much it would cost to replace them.

But few do. In fact, the Allstate survey found that just one-third of renters have done a home inventory checklist or tried to estimate the cost of replacing everything.

What can you do to protect yourself? Before buying a renters insurance policy, do a home inventory. (This is a good exercise for homeowners as well.) Make a list of all of the possessions you own or are financially responsible for in your rental unit, including furnishings, appliances, artwork, electronic and recreational equipment, books and knickknacks.

Back up your inventory with digital photographs of each item and video to help determine where it is located. If you're so inclined, you can draw a floor plan of the unit and indicate where the major items are located, or use a floor plan provided by your landlord.

It's a good idea to create this as an online file, so that the home inventory, electronic photos and digital video exist together and can be used to bolster your case in the event of a loss.

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