Do You Need Renter’s Insurance?
Let’s take a walk through your home. What would you do if you suddenly lost everything inside? How much did you pay to build your current wardrobe? How much time and money to decorate that charming living room? How about all those appliances in your kitchen? And then, of course, there are the electronics: television, router, laptop. What would happen if your house was damaged by a fire? If you’re a renter, you might assume that your landlord would take care of all the tricky stuff. But the truth is that a landlord is only responsible for the property itself; not for your possessions inside. That’s all on you, and it’s the realm of renter’s insurance.
Renter’s insurance is one of the most underutilized products out there, and it’s usually because many people don’t consider it worthwhile, an unnecessary cost.
Well, it’s possible that it is, or you might find on closer examination that it’s invaluable. Here’s some information to help you evaluate the pros and cons of getting renter’s insurance.
Pro: It Covers Things You Didn’t Think of
Most people think that renter’s insurance is pretty much limited to replacing your television if it gets stolen. But it can be much more than that.
Renter’s insurance will usually cover your liability for damage to others’ property, or accidents that people have while at your house. For example, if someone at a dinner party trips and has hospital bills that they hold you responsible for, or if you leave the tub running and it leaks down into an apartment beneath you, renter’s insurance might help you out.
Renter’s insurance can also help to pay for your costs of staying in a hotel if there’s a fire in your apartment, or even the cost of relocating if the property becomes uninhabitable.
Here’s one that most people don’t realize: renter’s insurance might even cover the cost of your stolen valuables that you have on you while you’re traveling.
Con: Limited Coverage – Read It All
Alright, that being said, there are also some things that you might think renter’s insurance should cover which it doesn’t. It won’t cover any damage you do to you rental property while you’re there; that will probably have to come out of your deposit, if it’s not covered by your landlord’s insurance policy.
You can learn more about what to do in that case here. Additionally, very few renter’s insurance policies out there cover the cost of earthquake damage or groundwater flooding. This might be an add-on option available for a slightly higher premium.
Never simply assume that your renter’s policy will cover things. There are a lot of budget options out there, and they keep the costs low by limiting coverage. So make sure that you read your full policy and understand what it does and does not cover.
Pro: It Costs Less than You Think
It might seem like an unnecessary expense, but the truth is that it’s really not that expensive. You can find a basic renter’s insurance policy that will cover you for $100 per year–that’s less than you probably spend on streaming services.
It’s usually quite easy to incorporate renter’s insurance into your budget, and it can really be worth that small cost if it helps you to sleep easier at night, and pays out when you need it the most.
Con: Deductibles Can Still Hurt
While having insurance can protect you from the crippling costs of many accidents, you’ll usually still need to pay a deductible before your coverage kicks in.
As with other insurance policies, if your premium (monthly cost) is low, your deductible (the amount you pay before insurance takes over) can be quite high. If you have a budget plan, you might find yourself paying for that replacement television yourself anyway.
However, if costs start to range up in the $1,000’s, it’s usually worthwhile to have insurance.
Some Considerations and Tips when Choosing
When you actually sit down and consider whether or not you should get renter’s insurance, here are some things to keep in mind:
- Your stuff is probably worth more than you think. Many of us just don’t consider the cost of our stuff because we handled our purchases in small doses. But what if ALL of it was suddenly gone? It would actually be a lot more money than you think. Pros estimate that the average renter in a two-room apartment has tens of thousands of dollars worth of personal possessions.
- When you’re shopping for prices, look into bundling. You might be able to get a really good price from the company that currently does your auto insurance.
- Note whether your policy covers actual cash value (ACV) or the replacement cost. Cheaper options will usually only cover ACV, which is adjusted for depreciation and wear of your possessions. So, if you paid $1200 for that laptop, but it’s now 3 years old, the ACV will be significantly less. On the other hand, the replacement cost will be much closer to what you bought something for in the first place.
- Some landlords require their tenants to have insurance, and it’s even specified on the lease. Make sure that you follow through on your commitment there. However, if it’s a requirement from your landlord, it might be worth getting feedback from your landlord about what the most vital elements of your insurance are. In fact, speaking of bundling, some homeowner’s insurance policies will also offer a discounted rate for insurance to tenants too, so ask your landlord to make sure that he or she is getting the most from their insurance.
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Category: Housing
