Unit 4: Home and Renters Insurance Notes: Unit 4b EQ: How can I protect my assets so that t can win tongterm wttn my nances? LT 3.4: Understand how Home and Renters Insurance works as wett as some dos and don'ts. Part1: Notes When you're ready, the purchase of a home is likely one ot the largest single purchases you will ever make. It will need to be protected through a homeowner's insurance policy. This policy will cover the costs of repairing or replacing your home in the event that it is damaged or destroyed by fire, storms, theft and a variety of other possible causes. u Homeowner's insurance should be guaranteed cost instead of extended replacement cost. I: When you are ready to move out of your parents' house, you need to have insurance, which covers the of the renter's apartment in the event of re, storm or theft. liability policies are a good buy once you have assets. An umbrella policy gives you additional liability protection above your other policies. Part II: Renters Insurance Imagine you are a recent high school graduate renting an apartment. You are making $2,000 monthly (net pay) and can afford the monthly premium of any of the three options below. The teacher will model how the slider on this tool works so you can determine the total value of the possessions you will most likely have in your apartment. What is the likely total value of the possessions in your future apartment? 1. Click on this link to guess the value of your property that needs to be covered: What's Your Stuff Worth?2. SELECT the best renters insurance plan for you by holding your selection. Remember. for every dollar you spend. it is a dollar you are not investing. Renters Insurance Options Click here for an infographic providing an overview of each coverage type Option 1 Option 2 Option 3 Monthly Premium: $25 Monthly Premium: $20 lvlonthly Premium: $[i Deductible: $5 Deductible: $5M Deductible: $12} Coverage includes: Coverage includes: You choose not to Personal Property - Personal Property purchase renters Coverage Coverage insurance Family Liability - Family Liability Protection Protection Guest Medical - Guest Medical Protection Protection - Additional Living Additional Living Expense Coverage Expense Coverage Reimbursement Actual Cash Value None [Replacement Cost} Add on coverage: Add on coverage: Flood Insurance - None Personal Umbrella Policy Average Cost for Renters Insurance: 331?; Click here for specics Part Ill watch this short video clip of the damage and stop at the 5:20 mark. b. REVIEW the list of items stolen and damaged below and determine how much the break-in will cost you based on the coverage you selected. If you selected the actual cash value option, your loss will include the difference between purchasing the item new and the depreciated value.Item Your original cost and cost Depreciated value of purchasing the item new CALCULATE your loss [total out of pocket expenses] The total cost to purchase the new items to replace what was stolen Line 2 Write the total amount your insurance company will pay to replace all of the items based on your insurance selection Actual Cash 1|Ilialue = total cost of the depreciated value of each item Replacement Cost = total cost of purchasing the items new Subtract Line 2 from Line '1 l'l Write your deductible amount Determine your out of pocket cost by adding together Line 3 and $1610 Line 4 Part W (15 minutes}: Reflect on the experience and respond to the following questions. 1. Which insurance option did you select and howr much was your loss? 2. If you selected the actual cash value option, would you make a claim? Why or why not? 3. If you had to explain to a friend what to consider when selecting a renters insurance policy, what would you say? : 4. What did you learn that you will apply in the future when deciding whether to purchase renters insurance or the type of renters insurance to purchase? 5. In order to make a more informed decision, what additional information would you need? What clarications would you have needed