Did you know 95% of homeowners insure their dwellings, but only 41% of renters carry similar coverage? Renters may assume their landlords’ insurance covers their belongings, might not know renter’s coverage is available, or think the odds of something happening to them are low.
Renter’s insurance works a lot like homeowner’s insurance except it’s typically less expensive to purchase. While carrying rental insurance is not required by law, many property owners, landlords, and property management companies require renters to purchase liability coverage.
“It’ll never happen to me.”
People often tend to think catastrophes won’t happen to them, but this mindset can lead to potentially devastating effects. While landlords are responsible for maintaining buildings, they aren’t responsible for tenants’ possessions. For instance, if a fire, storm, theft, or vandalism were to occur, your landlord would be accountable for any damage or loss to your building — but you wouldn’t be reimbursed for your possessions.
Renter’s insurance protects you
While some can get by only owning a futon and a microwave, most people possess electronics, clothing, furniture, and other valuables that are expensive to replace. Even if you don’t own much, renter’s insurance can protect you if:
- Your dwelling is declared uninhabitable due to damage and you need help covering living expenses.
- Someone is injured in your home due to your negligence.
- Your dog bites an invited or uninvited visitor.
- You accidentally leave the water in your bathtub running and flood surrounding apartments.
Keep in mind, aside from actual replacement costs, you could also be responsible for medical bills or be named as a defendant in a lawsuit should the worst happen in your rental property.
What to look for in a policy
Even on top of rent, utilities, and other necessities, most people find renter’s insurance to be affordable. On average, renter’s coverage costs about $12-$30 a month. When shopping for insurance, you’ll want to:
- Compare lower premiums with higher deductibles to higher premiums with lower deductibles.
- Understand the actual cash value (ACV) of your belongings versus their replacement cost value (RCV).
- Look at any additional property you might want to cover in your policy, such as jewelry, furs, or fine art.
- Consider adding coverage not included in standard policies, such as flood or earthquake insurance.
- Bundle your renter’s insurance with your car, franchise, or other insurance policies as many agencies offer multi-policy discounts.
When considering whether renter’s insurance is right for you, the big question you’ll want to ask yourself is, “Can I afford big losses or legal expenses?”
