Renters Insurance: Do I Really Need It?
Renters insurance is one of those nice security blankets everyone should have, but hope they never have to use. If ever needed, it will help cover your living expenses in case an emergency forces you to vacate your place temporarily. I recently read a report from 2014 that stated only 35% of renters purchase renters insurance. Keep reading to find out exactly what renters insurance is, who needs it, how it works, questions you should ask before signing on to a policy, how much it costs, and how to get — and keep — your costs down!
What It Is
A standard renters insurance policy is a “package” of four categories of insurance:
Personal property insurance protects your personal items: In the event of a burglary or damage, it helps you replace everything from furniture to electronics. Renters insurance can also protect your belongings even when they’re temporarily outside of the home (say, a piece of furniture that’s damaged while being delivered).
Liability coverage kicks in if someone gets hurt at your place and sues you, leaving you with medical and legal bills.
Living expense coverage will help with your expenses if you’re forced out of your home.
Guest medical coverage pays the bills if someone is injured in your home.
Who Needs It
If you think your home is at high risk for, say, a burglary or fire, then it’s a no-brainer; but frankly, this type of insurance is so cheap — and so heartbreaking not to have if you wind up needing it — that we recommend it for all renters.
How It Works
Your landlord’s insurance policy will most likely only covers the physical structure of your apartment or rental home, so don’t assume you’re fine if they’ve got one. The benefit limit on a renters insurance policy is usually a set amount based on square footage, the value of your stuff, and a general idea of your lifestyle. You can also add scheduled personal property coverage — a policy extension that covers particular items.
Questions to Ask When Purchasing Rental Insurance
Can I add on flood or earthquake coverage?
Is the coverage limit enough to replace fancy things, like furs, jewels, and electronics?
How much is the deductible (the amount you have to pay before insurance will start reimbursing you)?
Do you need a separate policy if you work from home?
How should you inventory your items to prove they existed if something happens? (I always encourage you document and take pictures.)
How will you be reimbursed for claims — will you get the item’s current value or the replacement cost?
Does the policy cover your new place if you move, or will you need to set up a new plan when your lease is up?
Does the policy protect your stuff when it’s in your car, on your body, or at work?
Average Cost of Renters Insurance
The premiums for renters insurance average between $15 and $30 per month, depending on the location and size of the rental unit and the policyholder’s possessions.
How to Get Costs Down
Install smoke detectors, fire alarms, dead bolts, and other protective devices — your landlord should chip in. Ask one of your current insurance providers (say, your car insurance company) to give you a quote for other policies you’re looking into. Bundling policies can save you up to 15 percent.
The investment that you’ll make for a renters insurance policy is well worth the cost. Think about it. Isn’t it much better to be prepared rather than risk losing your valuables! Renters insurance is very reasonably priced and shouldn’t be out of reach for you.