Why Military Members Need Renters Insurance

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Pat S. serves as an active duty military officer in the U.S. He has a deep interest in personal finance issues and is frequent columnist for Money Crashers, a financial website that gives readers tips related to family budgeting, real estate, credit and debt, and careers.

Life in the military is full of challenges and considerations that most civilian employees never have to worry about. These challenges include risk of injury in the line of duty, repeated deployments, and frequent moves worldwide. But one of the most difficult aspects is learning to adapt and find stability in an otherwise unpredictable lifestyle.

One effective way to prepare for the unpredictable is to make sure your life, health, and belongings are protected against loss. While the military outfits members with life and health insurance, it does not insure their belongings against damage, destruction, and theft.

So how can military members and families prepare for the worst while maintaining the flexibility demanded by a career serving their country? One great option is renters insurance.

What is renters insurance?
Renters insurance is so called because it is commonly purchased to insure the possessions within a rental home or storage unit, but is officially known as "personal property insurance." Renters insurance is somewhat of a "catch-all" insurance policy that covers the otherwise uninsured.

Traditionally, homeowner's insurance covers a home and the homeowner's possessions from damage or destruction, and it protects the homeowner from liability. But homeowner's insurance does not cover a renter's possessions from theft, damage, or destruction, or the renters themselves from liability.

Personal property insurance covers all of the above, as well as many other unforeseen circumstances. For example, your car insurance policy may not cover theft of possessions stored in your vehicle, but your personal property policy probably will. Or if you break your television or a piece of antique furniture during a move, your personal property coverage will likely pay for the repair or replacement.

Who offers renters insurance?
Most major insurance companies offer some permutation of personal property insurance. In fact, it is likely that your current insurance provider offers it along with a discount for bundling it with your existing insurance policies.

When shopping for a renters insurance policy, look for a highly rated company with good customer service that provides the most extensive coverage at a reasonable expense. Take the time to shop and compare policies. Examine each insurance company's financial stability via a ratings agency, such as Weiss Ratings. It's not worth saving a few dollars a month to go with an insurance company that is not financially sound, especially since as a military member, the likelihood of needing your renters insurance coverage is much higher than the rest of the population.

Why military members need renters insurance
Military members are more likely to need and, therefore, benefit from a renters insurance policy for the following reasons:

  1. Vacant Properties. Military members often rent property in areas a long way from home. This means that during a deployment or visit home, family and friends aren't there to check on the property or make it look like someone is present. A vacant-looking home is a likely target for home burglary.
  2. Always on the move. Military members are often and repeatedly called upon to uproot and move thousands of miles. This increases the probability that possessions are lost, damaged, or destroyed in transit.
  3. Potential for theft. Because of the location of many military bases, military members are often targeted by criminals, which raises the likelihood of theft and burglary claims.

Factors to consider in obtaining renters insurance
In addition to covering your possessions in a variety of locations, a solid renters insurance policy will protect you from liability in the event of a lawsuit. With many policies offering low monthly payments for military members, it's a no-brainer to at least consider signing up for one.

If you do decide to shop for a renters insurance policy, look for the following four factors:

  1. Amount of coverage. A huge factor in the price of your personal property policy will be the amount of insurance you desire. If you are choosing to supplement your traditional homeowner's insurance, a smaller coverage amount will likely do the trick. On the other hand, if you are renting a home and have a great number of expensive possessions, a larger coverage amount is likely to be more appropriate. If liability coverage is important to you, check what exactly is covered and to what extent.
  2. Deductible. Another important consideration is the deductible you are comfortable with. If you have a decent cash cushion, choosing a higher deductible will lower your semi-annual insurance premiums. However, if you live paycheck to paycheck, you may want to choose a lower deductible until you can build up your emergency fund.
  3. Actual value or replacement cost of possessions. When choosing an insurance policy, you can either opt for coverage of the actual cost of possessions, or the replacement cost of your possessions. Choosing actual value (i.e., insurance which covers the estimated value of your items on the day they are stolen, lost, damaged, or destroyed) may save you money on premiums, but might result in a smaller settlement if you need to file an insurance claim. Replacement cost coverage (i.e., insurance that covers the cost of replacing the items in full) will often render a larger payout, but costs more when it comes to your premium payments.
  4. Location of policy and previous claims filed. Like any insurance policy, if you have a history of filing frequent claims or live in an area prone to crime, you will pay more for coverage. Consider these factors when shopping for a policy, but also be aware that you are paying for the peace of mind that comes from having personal property coverage.

Final thoughts
Many military personnel believe themselves to be adequately insured by their automobile insurance policy or their landlord's homeowner's policy. If you still feel this way, look at your auto policy or talk to your insurance company about specifically what is covered, to what extent, and in what circumstances.

Also inquire as to whether your possessions are insured by your landlord's homeowner's policy. Though you'll probably find out you're not covered to the extent you thought, the good news is that a renters insurance policy is relatively inexpensive. Given that some policies are as low as $10 a month, this type of insurance can go a long way toward providing affordable peace of mind and money when you need it to replace or repair your possessions.

Do you have any experience with renters insurance? Have you had to file a claim before?

We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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