Latest posts by Kumiko Ehrmantraut (see all)
- How to Deal with Debt in Collections - April 14, 2021
Everything You Never Knew about Renters Insurance
We’re all pursuing our version of the American Dream, and for many of us, owning our own home is one aspect of that dream. But the fact is that many of us rent, whether by choice or sheer necessity.
With home ownership at its lowest point since the 1960s, renting is definitely on the rise. An ever-increasing cost-of-living rate, the overpriced housing market, student loan crisis, and tightened lending standards have made renting the new normal.
And renting does have its perks.
Renting gives you more free time, is more short-term budget friendly, doesn’t put you into debt, and generally allows you to have a shorter commute to work. Plus, many rentals include utilities and other monthly fees, and you don’t have the stress of maintenance, repairs, and lawn care.
But these perks don’t eliminate all of your responsibilities! Specifically, I’m talking about renters insurance.
Is renters insurance really worth the cost?
It seems that only 40% of renters have insurance policies. Compare that to 95% of homeowners. This causes me to ask:
- What are the reasons why so many renters don’t have insurance?
- And is renters insurance worth the cost?
Reason One – “Renters Insurance is too Expensive.”
This is the easiest misunderstanding to clear up. This lie is keeping too many people from enjoying the benefits of insurance coverage. Unlike your health and car insurance, renters insurance is very affordable.
The average cost of renters insurance is around $15 a month!
Fifteen dollars. That’s a couple of quarters a day.
For this nominal fee, the average policy with a $1,000 deductible includes personal belongings coverage of $40,000 and personal liability of $100,000. Of course, you can adjust the amounts and the deductible to suit your needs and budget.
Renters insurance is readily available and can usually be bundled with your car insurance, reducing the cost even more.
Would you like to see how much renters insurance would be for you? Check out Lemonade Renters Insurance. They reverse the traditional insurance model by take a flat fee and give back what’s left to causes you care about.
Reason Two – “I Don’t Have Enough Stuff for Renters Insurance.”
Thinking you “don’t have enough stuff” is a common reason many people don’t buy renters insurance.
If you think your apartment contents aren’t worth enough to warrant insurance, you probably haven’t taken a thorough inventory. Insurance experts suggest you put a value on all your belongings, room by room, piece by piece.
Don’t just consider big-ticket items like furniture and electronics. Add up the value of your wardrobe, dishes and kitchen contents (including food), books, linens, toiletries, photo albums, toys, bicycles, sports equipment, etc.
The average 2-bedroom apartment contains more than $30,000 in personal belongings.
In the event of a disaster, the cost of replacing even basic living supplies adds up quickly. Should you encounter a fire or water leak, weather-related damage from wind or lightning, vandalism or theft, your own renter’s insurance policy will keep you protected.
Reason Three – “The Landlord’s Policy Covers my Belongings”
You might be surprised to learn that your possessions are not covered under your landlord’s homeowners policy.
Your landlord’s policy protects the building itself and liability in the case of a property-related injury. It does not, however, cover any of the tenants’ contents.
This comes down to even small things. For example, if an appliance or faulty plumbing causes smoke or water damage to your items, the landlord’s policy covers the repair of the appliance or plumbing, but not the damage to your property. If the refrigerator breaks down and you lose a couple hundred dollars’ worth of food, your landlord is not liable.
Covering the personal contents of your rental property is just one of several things your renter’s insurance will do.
Reason Four – “I Didn’t Know Renters Insurance Covered THAT”
I think it’s fair to say that most people understand renters insurance is designed to replace the items in your apartment or rental home in the case of a theft or fire or some other type of disaster.
I think it’s also fair to say that most people have no idea that renters insurance also provides you coverage for several other scenarios.
- Medical Costs. Renters insurance covers liability for visitors. The average policy includes up to $5,000 in medical coverage for anyone who may be injured in your home. This may even cover dog bite if your specific policy covers such.
- Property Damage. Renters insurance also covers property damage or injury you or a family member cause to others. So, if your kid spills kool-aid on the neighbor’s rug or you knock an expensive lamp off their table, your policy could pay for a replacement.
- Borrowed Items. For items that you have borrowed from friends or even for items you have rented, your renter’s policy is designed to cover things “in your possession” should they become lost or damaged.
- Property Away from Home. Renters insurance covers your personal belongings, even when they are “off property.” So, if you have items that are stolen out of your car or from a hotel room, for example, your policy will cover it up to 10% of your total coverage. (In other words, if you have a $40,000 policy, up to $4,000 will be covered in “off property” losses.)
- Hotel Costs. This one was a surprise to discover! If your rental home or apartment is unlivable during repairs after a disaster like a fire, your renter’s insurance covers “additional living expenses.” This means you won’t have to move back in with your parents or sleep on a park bench! This coverage reimburses the cost to rent another place to live in the interim.
- Legal Fees. If you find yourself on the wrong end of a lawsuit as a result of another person being injured in your home, your renter’s insurance will pay a portion of your court costs and legal fees.
This is a good place to note that renters insurance does not cover everything. Expensive items, such as engagements rings, may need extra protection policies. And be forewarned that flood insurance is only available through the federal government and is never included in homeowners or renters insurance.
So, is renters insurance worth the money?
Renters insurance is absolutely worth the cost!
For a very reasonable price, having this insurance can protect you in the case of an emergency or catastrophe.
Decide how much insurance you need with a thorough inventory, and when purchase a policy with the coverage necessary to replace all of your belongings. Get quotes from several companies, including your current car insurance company.
Not having this insurance means you will have to replace everything on your own. And your renter’s policy will provide you with about $40,000 in personal property replacement and up to $100,000 in liability costs. These benefits far outweigh the $180 yearly cost of the insurance.
Whether you are struggling to make ends meet or you can afford to replace everything out of pocket, renters insurance is well worth the cost (get a free quote from Lemonade Renters Insurance, the insurance company that gives back).
As someone who works in the insurance company, the benefits from getting renters insurance outweigh the cost, which is not that high if you’re looking at the benefits.
Mandatory I would say, especially if you live in a hurricane prone or coastal area.
Great post!
I pay only $23.00 a month for my policy through geico. As much as I have wanted to use that $23.00 for paying off our debt I have continued our policy. I rather have it just in case and have that cushion instead of having to keep 50K aside (which we don’t have) if something happens.
wow great article!
I didn’t get renters insurance until my first apartment out of college and I am so glad I did! My roommate and I covered $25,000 coverage for $15/month. During our 4th month, the apartment next to ours had renovations and a fire started. We didn’t have fire damage, but smoke and water damage. Insurance covered everything lost plus hotel costs while we were homeless. Our total bill came to just over $24,000. Cleaning bill alone was $18,000. Don’t underestimate the value of insurance nor the value of your property!
Yes, renters insurance is worth it. I have renters insurance. It covered the furniture stolen from my storage unit. You never know what can happen.