Renters Insurance : To have or not to have?
If you’re renting an apartment or home, its not a bad idea to consider renters insurance. Your landlords property insurance policy covers losses to the building itself. Your personal property and certain liabilities, however, are covered only through a renter’s insurance policy that you, as a tenant, have to find and pay for. While 95% of homeowners have a homeowner’s insurance policy, only 37% of renters have renter’s insurance, according to a 2014 Insurance Information Institute poll conducted by ORC International. [L1]
Why do so few renters have insurance? One explanation is that many people incorrectly assume they are covered by their landlord’s policy. Another reason is that people underestimate the value of their belongings. If you add up the value of just your clothing and electronics, it probably wouldn’t take long to get into the thousands of dollars. One more often overlooked reason is liability: If someone is injured in your house – a friend, neighbor, or the pizza delivery person – they could sue you. Even if you thought you didn’t need insurance, here are four good reasons why you should get a renter’s insurance policy.
- It’s affordable.
The average renter’s insurance policy costs $187 a year, according to 2011 figures reported by the National Association of Insurance Commissioners (NAIC) in 2013. Your actual cost will depend on factors, including how much coverage you need, the type of coverage you choose, the amount of your deductible and where you live.
- It covers losses to personal property.
A renter’s insurance policy protects against losses to your personal property, including clothes, jewelry, luggage, computers, furniture, and electronics. Even if you don’t own much, it can quickly add up to a lot more than you realize – and a lot more than you’d want to pay to replace everything. According to esurance.com, the average renter owns about $20,000 worth of personal property. [L2]
Renter’s policies protect against a surprisingly long list of perils. A standard HO-4 policy designed for renters, for example, covers losses to personal property from perils including:
- Damage caused by aircraft
- Damage caused by vehicles
- Explosion
- Falling objects
- Fire or lightning
- Riot or civil commotion
- Smoke
- Theft
- Vandalism or malicious mischief
- Volcanic eruption
- Weight of ice, snow or sleet
- Windstorm or hail
- Damage from water or steam from sources including household appliances, plumbing, heating, air conditioning or fire-protective sprinkler systems
- It provides liability coverage.
Liability coverage is also included in standard renter’s insurance policies. This provides protection if someone is injured while in your home or if you (or another covered person) accidently injure someone. It pays any court judgments as well as legal expenses, up to the policy limit.
Most policies provide at least $100,000 of liability coverage, and between $1,000 and $5,000 for medical-payments coverage. You can request (and pay for) higher coverage limits. If you need more than $300,000 of liability coverage, ask your insurance company about an umbrella policy, which can provide an additional $1 million worth of coverage for about $150 to $300 a year.
- It covers your belongings when you travel.
Renter’s insurance covers your personal belongings, whether they are in your home, car,or with you while you travel. Your possessions are covered from loss due to theft and other covered losses anywhere you travel in the world. Check your policy or ask your insurance agent for details on what constitutes “other covered losses.”
The Bottom Line
Renter’s insurance provides coverage for your personal belongings, whether they are in your home , car or with you while you’re on vacation. In addition, renter’s insurance provides liability coverage in case someone is injured in your home or if you accidentally cause injury to someone.