Homeowners Insurance NJ Home Insurance rates and consumer help for insuring your New Jersey house. Get free quote help and rates as you learn various NJ policy coverage types.
It is amazing to think that nearly two-thirds of the estimated
81 million people in the United States who are tenants do not have
the proper insurance coverage. This equates to vast amounts of uninsured
assets and personal liabilities, as well as huge commission losses
for agents and brokers.
There are a number of reasons why these respondents do not procure
homeowners coverage. They are discussed below.
Myth #1: Coverage Is Expensive
Many of these uninsured respondents believe that this insurance
coverage is too expensive. However, renters or contents insurance,
often written on the Insurance Services Office, Inc. (ISO) HO 4
Contents Broad Form, or the American Association of Insurance Service's
(AAIS’s) similarly titled Form 4, is quite inexpensive. According
to the IIABA, the average premium is $12 per month for $30,000 in
property coverage, $6,000 in loss of use coverage, and $100,000
in liability coverage.
This premium is actually far less than the price of three meals
out per month. Tenants can often save even more money on premium
by choosing a higher deductible, such as $1,000.
Myth #2: Exposure Is Already Covered
Another reason many tenants do not procure a homeowners contents
policy is that they believe that their landlord’s insurance covers
their personal property. However, the apartment owner’s policy covers
only the apartment building itself and common areas and the apartment
owner’s liability. It does not cover the tenant’s personal property
or liability exposures. If the tenant’s apartment burns to the ground,
the apartment owner is not responsible for damage to any occupant’s
personal property.
This is why a homeowners contents policy for the tenant is essential.
This policy provides nearly identical coverage for personal property
as compared to the Homeowners 3 Special Form, commonly used to insure
single family residences.
Some tenants, such as older college students, may also mistakenly
believe that their personal property is automatically covered by
their parents’ homeowners policy. (This is normally the case for
younger students living in college dorms because a dorm room is
usually considered a temporary location.) However, if the older
student’s apartment is their permanent address, even though their
parents may help support them, they generally are not considered
an insured under the parents’ homeowners policy.
Myth #3: Coverage Is Unnecessary
Many uninsured tenants are young people who may not realize the
high value of their clothing, furniture, computers, stereos, and
often extensive CD collections. This is particularly true as they
get older and gradually accumulate more personal property. In addition,
many tenants own valuable jewelry, which can be endorsed onto the
homeowners contents policy via the scheduled personal property endorsement.
Myth #4: Coverage Is Narrow in Scope
This policy also covers loss of use in the event of a destructive
fire or another major loss. If there is a loss and the apartment
is uninhabitable, the insurer would pay for the necessary hotel
costs until the insured moves into another apartment.
In addition, the policy provides personal liability coverage. For
example, if the insured, while operating his low horsepower outboard
motor boat, negligently injures another boater, coverage applies
under the liability section of the homeowners contents policy. Another
type of personal liability claim might entail a guest tripping and
falling inside the insured’s apartment. Note that the liability
coverage of a homeowners contents policy is nearly always identical
to that of the homeowners special form.
Also, some tenants make improvements to their apartments, such as
the addition of drapes and built-in cabinets. With the homeowners
contents policy, up to 10 percent of the personal property limit
for additions or alterations to the dwelling made or acquired at
the insured’s expense are covered. Thus, if the insured has $30,000
in personal property limits, he automatically receives $3,000 in
coverage for any improvements or betterments he makes to the apartment.
The Benefit for Insurance Agents
This substantial uninsured populace is a reminder about an agent’s
lost opportunity to earn more commissions and gain customer loyalty.
It is true that the premium and resulting commission is low for
the homeowners contents policy. But it is also true that the administrative
costs are low, since the policies are standardized and do not normally
require much servicing. (There are also fewer losses paid under
these policies, since the building itself is not covered.)
In addition, selling a homeowners contents policy can often lead
to additional sales, such as the tenant’s personal auto policy,
life insurance policy, and health insurance policy. Furthermore,
if the tenant later purchases a home, the agent is in a great position
to write this expanded coverage.