Jean Chatzky: Fill in insurance cracks

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Q: From big-ticket items, like furniture and electronics, to your smaller goods, like kitchen utensils and clothes, how much would it cost to replace the contents of your home?

A: More than you probably think — which is why it’s a good thing that mortgage insurers require homeowners to maintain homeowners insurance. For renters, unfortunately, insurance is usually optional.

Six in 10 Americans who rent their homes or apartments live without renters insurance, according to new data from Why? Forty-five percent believe it’s too expensive (although 84 percent of that group also admits they either don’t know the price or think it’s more expensive than it actually is). Laura Adams, a senior analyst for the website, says this is a huge disconnect. “It’s one of the biggest bargains you can get with insurance,” she says, citing the average price of $187 a year. “It’s incredible protection for that amount of money.”

And it’s necessary. Many people believe they don’t need renters insurance because their landlords have policies. Adams also says that “99.9 percent” of the time, a landlord’s insurance policy only covers his or her assets, including the structure of the home and items that came with it. It won’t cover your personal belongings or your liability if, for example, your dog gets snippy with the mailman.

Not a renter? There are other types of home-related coverage you may be missing. Here’s a look.

Flood insurance

This is typically sold as a separate policy or a rider to your existing homeowners policy. If you live in a high-risk area (with at least a 25 percent chance of flooding during a 30-year mortgage), then you’ll be required to buy flood insurance, according to Lenders in moderate- to low-risk areas, however, are usually off the hook. ( offers a tool to gauge your risk.)

“Many people underestimate the risk of flooding,” says Jeanne M. Salvatore, senior vice president and chief communications officer for the Insurance Information Institute. Just because you live in a moderate- to low-risk area doesn’t mean you’re in the clear: 25 percent of claims filed through the National Flood Insurance Program come from homes outside high-risk zones.

How much it costs will depend on the risk, says Salvatore, but the average policy runs $650 per year. Also note: Flood policies can cover water damage from a variety of causes — like melting snow that seeps into your home from the ground up — that your homeowners or renters insurance won’t.

Sewer backup insurance

It’s not pleasant to think about, but the number of backed-up sewers in the U.S. is increasing at an annual rate of 3 percent, according to the Civil Engineering Research Foundation. Why? Sewers, like the rest of our infrastructure, are aging.

Other causes include combined pipelines (when storm water and raw sewage are funneled into the same pipeline) and tree roots that grow into the lines. Fortunately, additional sewer coverage is pretty cheap, costing around $40 to $50 a year.

Commercial insurance

“If you have a home business, you should have commercial insurance to protect business equipment and inventory,” suggests Adams. This can cover your liability if customers are coming to and from your property, too.

You might think your home insurance policy is enough, but the usual limit is only $2,500 for business equipment at home, and $250 for it away from home, according to the Insurance Information Institute. Compare this with the cost of one computer or laptop and you can understand the need for more coverage.

Some insurers offer in-home business policies that are similar to commercial policies, but for half the price. For example, for less than $300, you can insure your home business for up to $10,000 — and cover your liability for up to $1 million.