Do I Need Renter’s Insurance?
If you’ve recently been looking at moving into an apartment, you might be wondering if you need renter’s insurance. Technically, you are only required to have renter’s insurance if your landlord or building requires it of you. Still, even though it is not required, you should strongly consider purchasing a renter’s insurance policy. For most renters, it is an extremely valuable tool to protect yourself from potential financial consequences.
Landlords or property management companies can require tenants to have renters insurance. In fact, an increasing number of landlords are doing just that. They may do so to limit the chance that tenants will come after them for personal property damage or liability costs. Still, anyone who rents the property they live in should probably have a renters insurance policy. Having such a policy can reduce the financial impact of unexpected events damaging your belongings.
Think about some of your belongings. Do you like your laptop and bedroom set? Would you be able to purchase them again if something like a fire damaged your apartment? Would you be able to replace your jewelry if someone were to break into your apartment and steal them? If not, you definitely need to consider purchasing renters insurance.
What do Renter’s Insurance Policies Cover?
Generally, there are four different areas that renters insurance policies will cover.
- Personal property damage: If your belongings are damaged or even destroyed by an event included in your insurance policy, the insurer will cover the cost of the damage up to your policy’s limit.
- Personal liability: This will protect you from legal liability if an accident were to happen in your residence. Accidents like your dog unexpectedly biting someone or someone slipping on your floor and breaking their arm will be covered under renters insurance. Your insurance company will be there to pay for things like medical bills and lost wages if someone were to be seriously injured in your apartment.
- Loss of use: If a covered event causes your residence to become uninhabitable, your insurance company will cover expenses that exceed your normal living expenses.
- Medical protection: This pays for reasonable medical expenses for someone who gets injured while at your residence.
It is arguable that people with lower incomes have a greater need for renters insurance, especially when it comes to liability and loss of use coverages. Such damages could be crippling financially for someone without enough savings to cover that cost. And accidents or other events can happen to anyone, no matter how much they earn.
How Much Renter’s Insurance Do I Need?
It is recommended that everyone should have at least $100,000 in liability coverage. However, coverage for the contents of your apartment will vary for everyone. To find out how much renter’s insurance you need, follow these simple steps.
First, complete an inventory of your possessions. A home inventory should list your personal possessions and include information about their age, their purchase price or current value, and other important identifying information.
Next, find out about bundling options. Many insurance companies offer significant discounts when you buy more than one policy from them. Many renters will bundle an auto insurance policy with their renters policy to get some savings.
Finally, choose the best deductible for your situation. Your insurance premiums will reflect which deductibles you agree to. A lower deductible will mean a higher premium while a higher deductible will mean a lower premium. Always keep in mind when choosing your deductible that the insurer will not reimburse you for a loss that is less than your deductible.
How Much is Renter’s Insurance?
How much renter’s insurance is might surprise many people, who tend to overestimate the average cost. The average annual renters insurance premium in the US is $187. For comparison, this is well below the average homeowners insurance policy, which is $1,083 each year. Although how much renters insurance is will vary by person, you could easily find a great policy for $20 or less per month.
Coverage add-ons are also available for renters insurance. While they will make the policy more expensive overall, it will end up being much less expensive than having a specialty policy underwritten for specific items. You could get an add-on for things like jewelry, furs, electronics, or collections.
Other Important Aspects of Renters Insurance
Even beyond the coverage mentioned above, there are other important aspects of renters insurance that you should know about.
It Protects You When Homesharing
Homesharing with services like Airbnb is a great way for many people to make a little bit of extra money. Another added bonus of renters insurance is that it can protect you if you were to list your apartment as a short-term rental. For example, if an Airbnb guest were to damage your personal property, the insurance policy protects you.
It Protects You Even Away From Your Residence
A little-known fact is that personal property and liability coverage travels with renters. This means you can relax with your belongings no matter where you take them. The normal limits of your renters insurance policy still apply, but some coverage is better than no coverage. For example, it’s easy to misplace a necklace or watch on a trip. Plus, those items also tend to be more susceptible to being stolen and thefts are covered by renters insurance.
So, Do I Really Need Renter’s Insurance?
Unlike car insurance, renter’s insurance is not legally required. However, for some people, their building management company or landlord will require proof of insurance before signing a lease agreement. For others, it may not be required, but they should still consider a policy.
Many renters who don’t purchase insurance do so because they believe they don’t own many valuables. This is a mistake for two reasons. First, almost everyone’s belongings are worth more than the estimate. Second, that assumption disregards the value provided by liability and loss of use coverage. According to Allstate, the average value of possessions for a standard two-room apartment is $30,000. When you actually take the time to do an inventory of your possessions, you may be surprised how much you have and how much it is all worth. Still, even if you don’t have much personal property, the other coverage features still make a policy worthwhile.