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What is Home Contents Insurance?

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Essentially, home contents insurance is renters or leasers insurance. The policy covers the contents of your home, not the building itself, which would be considered the responsibility of your landlord. Renter's insurance is a good idea for anyone who doesn't own their own home, because it covers disaster, theft, and sometimes damage or loss away from home.

The Ins and Outs of Home Contents Insurance

Just about anyone who rents or leases a home can get home contents insurance. How much you get depends on the value of how much you own. In most cases, you'll fill out a home inventory of the items you own, and your insurance agent will give you an idea of how much your policy will cost. Remember to check on the way your policy pays you in the event of a loss. Some policies reimburse you for the item's value minus depreciation. If the item is relatively old, you may not be able to afford to replace it. A better option is replacement value. That means the policy will pay you to replace the item, even if it costs more than it did originally. Replacement value is a little more expensive, but it's worth it, especially if you suffer a major loss.

Look at the limits on your policy, as well. Some policies limit the insurance company's total liability. In that case, if you suffer a catastrophic loss, the company may cap their liability, and that means you won't be able to afford to replace everything that was stolen or destroyed. Look for policies without limitations, or where you can add more coverage (called riders) in certain areas if you need it. For example, if you have a home business, most insurance companies only cover $1,000 or so of computer equipment. Most home businesses have much more equipment than that, so you'll need to add a rider for your business computers. In most cases, items like jewelry, furs, Oriental rugs, and antiques also need riders to cover their entire value.

Take Inventory for Your Insurance Policy

One of the best ways to keep track of your possessions is to periodically take an inventory of everything you own. You can prove to the insurance company that you had these items, and you can keep track of items you've purchased in the last year. One of the easiest ways to take inventory is to use a video camera to catalog all your possessions. With a date stamp, the video shows everything you own, including valuables, and if you put it in a safe place, like a safe deposit box, you'll always have a record of your belongings, even if disaster strikes and your home is heavily damaged.

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