Will My Homeowner’s Policy Cover Damage to My Friend’s Belongings?

Homeowner’s insurance is a necessity for anybody who owns a home or has a mortgage. The policy will protect you in the event that your home is damaged from any number of factors beyond your control, including storms, fire, falling trees, wind damage, and more.

Your home is a huge investment, and it’s important to protect its value. If a storm damaged your home so badly that it would cost you a fortune to fix, not only would you have lost the value of the home to the storm, you’d still have a mortgage on a property that is no longer worth what you owe. For all of these reasons, it’s important to have homeowner’s insurance.

An HBF homeowner’s insurance policy not only protects the physical structure of your home, but also its contents. Policies differ on what they cover—you always get what you pay for—but for the most part, your home’s contents are covered in the event of a storm or similar event damages the home so badly that valuable possessions inside are also damaged. For instance, if a tree smashed through your roof and allowed rainwater to pour in, damaging expensive electronics, you would likely be covered.

So your homeowner’s policy would be pay for a new roof, new flooring, and a new TV to replace the one that got washed away. Insurance companies encourage the insured parties to keep a detailed list of valuable items in the home along with receipts so there’s no question about what is in the home when it comes time to file a claim.

But does your homeowner’s insurance policy cover the belongings of visitors to your home while they are staying with you? Let’s say you have friends or family staying with you for the weekend, and a burst pipe floods the guestroom soaking everything on the floor, including your brother’s brand new laptop. Can you get your homeowner’s policy to pay for a replacement? In general, yes, your brother’s computer is covered under the policy and is eligible for a claim.

However, to make sure there are no hiccups in the claim process, it’s important that you contact the insurance company to request this coverage to begin with. Some policies may include coverage for guests and other visitors by default, but many policies will need to have this coverage added to it as a separate rider.

So you’ll have to decide if visitor and guest coverage is worth it to you to pay a little bit more. If you frequently have guests over that tend to bring expensive items like electronics or jewelry, it might make sense to make sure you have the proper coverage. Covering your visitor’s possessions would certainly put your mind at ease if you’re worried about theft, for example. However, it might also be redundant if your guests already have their personal belongings insured by their own policy. Your choice depends on how frequently someone visits your home and what they tend to bring with them.

Why Purchasing Rental Car Insurance Isn’t Necessarily a Waste of Money

I recounted in my last post the many adventures we had driving 1,750 miles from Illinois to Arizona where we damaged not one, but two rental cars.  We saved $100 by not purchasing the rental car company’s auto insurance, but that decision cost us $500 in our deductible.  Not my brightest move ever.

If you think, like I did, that a rental car company’s insurance is a scam that should be avoided like the plague, here are some reasons why you might want to reconsider:

The Rental Car Company Has a Different Standard Than You

Rental Car InsuranceThe rental car company we used said any damage smaller than the size of a quarter, they would let slide.  Anything bigger than that, and it needed to be repaired.

Any time you drive a car, you risk bumps and scratches to the car’s exterior.  I have a large scratch on the back of my vehicle that I find annoying, but not worth the price of paying my $500 deductible.  I’m guessing your own vehicle has similar scratches and dents.  They’re minor, and you don’t want to spend the money to repair them.

The choice is yours because it’s your vehicle.  However, if it’s bigger than a quarter, the rental car company is going to make the repair, and you will pay if you don’t take out the rental car company’s insurance.

Your Insurance Premium May Go Up

Another reason people let minor dents and scratches on their own vehicles slide is because they don’t want to face a claim and risk having their insurance go up.

Some people even do this for more major repairs.  Several years ago, a man rear-ended me, and he chose to pay the $1,400 for the repair to me directly so he could avoid submitting the claim to his insurance and risk having his premium go up.

If you don’t purchase the rental car company’s auto insurance, you’ll have to choose to pay out of pocket or to risk having your premium go up.

How to Decide If You Should Purchase Insurance from the Rental Car Company

To decide whether or not purchasing insurance from the rental car company is worthwhile, ask yourself these questions:

1.  Have you made any claims on your insurance in the last three to five years?  If so, you will probably want to purchase the rental insurance; in the long run, that will be cheaper than facing a spike in your insurance.

2.  How far do you have to drive?  Of course, accidents can happen anywhere, but if you’re renting a car for the weekend and driving it around your hometown, you may be able to avoid rental insurance.  Our problem was that we were driving 3,500 miles round trip in an area we were unfamiliar with.  Things like dead deer and street sweepers on the highway pose risks that you can’t foresee before the trip

3.  How high is your deductible?  If your deductible is anywhere from $500 to $1,000, purchasing rental insurance may be smarter, especially if it is going to be less than $100.

What is your opinion?  Purchase car rental auto insurance or just rely on your own car insurance?

Original img credit: Insurance Disclaimer on Flickr

How Trying to Save $100 Cost Me $500

My husband was offered a job in Arizona, 1,750 miles from where we current live in Chicago, Illinois.  Because neither of us had been to Arizona before, we wanted to visit before we committed to living there.  Time was of the essence, and booking a last minute flight for the two of us was expensive, so we decided to drive.

We also decided to rent a car for the trip to save wear and tear on our car and pay less in gas (our family car is a minivan, so a small sedan would use much less gas).

Being frugal, I decided not to buy the rental car company’s insurance.  I had called my auto insurance company, and they assured me that my coverage would cover any damage to a rental car.

By not buying the rental company’s car insurance, I saved $100, or so I thought.

I was wrong.

Traveling Long Distances in Desolate Areas

100 cost me 500I was proud of my penny pinching ways until our first night on the road.  We were driving along a desolate stretch in Oklahoma; it was dark, and we were ready to stop for the night.  A semi was in front of us and swerved at the last minute.  We had no time to wonder why; a deer carcass was straight in our path.  Even though my husband swerved, he still hit it.  We felt the thump under our car and feared the worst.

When we got to the hotel, we didn’t see any damage to the bumper, so we thought we had lucked out.

That thought soon faded when we were driving through Texas the next day and heard something clicking against the tire.  A piece of the interior bumper was hanging down and hitting the tire.  We pushed it back in and thought all was well until we hit the brakes in Santa Fe and felt resistance on the tire.  Yep, the piece had fallen down again.

Long story short, in Arizona, we traded out the vehicle for a different one and had to pay a $500 deposit for the repair.

Street Sweeper Causes Havoc

On the way back home, in our new rental vehicle, we ran into a street sweeper on the highway in New Mexico.  (Seriously?  I have never seen a street sweeper sweeping the highway!)

As we passed the street sweeper, what seemed like a million pebbles pelted our windshield.  I think my husband and I cursed in unison when we heard a particularly nasty hit on the windshield and saw a chip in the windshield, right in the middle of the driver’s side.

Car rental number two, and another injury to the car.

Sigh.  Suddenly my decision to try to save $100 by not getting the rental company’s car insurance didn’t seem like such a good idea.

Luckily, when we turned in the second car, we weren’t charged for the damage to the windshield.  (Any dent or scratch smaller than the size of a quarter, the rental car company let’s slide.)

Still, my desire to save $100, ended up costing me $500!

Stay tuned for part two, where I’ll explain in more detail why rental car companies’ insurance isn’t the waste of money we all think.