Do You Need Renters Insurance?

Renters insurance is similar to homeowners insurance. It helps pay to repair or replace a tenant’s belongings if they are damaged by vandalism, theft, explosion, fire/smoke, lightning, wind, or water damage from burst pipes, an overflowing sink or bathtub, and some other specific incidents, like sewer backup. Damage from floods is not covered; you’ll need a separate policy for that.

Renters Insurance Protection

Three types of financial protection are included in your renters insurance policy: coverage for personal possessions, additional living expenses, and liability protection.

Coverage for personal possessions: When deciding how much insurance you should purchase, inventory your belongings to get a better idea of exactly what you have, and take pictures if possible. Include furniture, electronics, kitchen appliances and utensils, clothing, and bedding on your list.

You may choose to purchase a stand-alone policy to cover the cost of replacing a laptop. You may also add a floater, which is a separate policy in addition to your renters insurance to cover more expensive items such as collectibles, musical instruments, sports equipment, and jewelry.

Additional living expenses: Renter’s insurance policies cover the cost of hotel and restaurant bills if you are temporarily displaced due to a covered event. Check your policy carefully because some insurance companies only provide a certain amount of coverage or only offer it for a certain amount of time.

Liability protection: If someone is injured in your apartment or rental home and sues you for damages, this type of protection covers the cost of your legal defense and any award, up to your coverage limit.

Common Myths About Renters Insurance

It’s time for a pop quiz. Do you know the facts about renters insurance?

You’re covered by your landlord’s policy. False. Most landlords have insurance, but it only protects his or her possessions, including the building and infrastructure – not yours.

It’s too expensive. False. Renters insurance typically runs $30-$40 a month, but buying it as a package deal from your car insurer can sometimes result in a lower premium.

You have to have it when you’re renting. False. But it’s definitely a good idea. While some landlords and apartment complexes will require their tenants to have renters insurance, it’s typically up to the tenant. You’ll usually have a choice between actual cash value coverage – the price of your belongings at their depreciated value – or replacement cost coverage, which doesn’t take depreciation into account. Replacement cost coverage runs about 10% more, but it might be the best choice, since most items depreciate quickly.

Renters Insurance; to Buy or Not to Buy

The easy choice is declining renters insurance, and you won’t be alone if you do. Statistics say only a small percentage of renters buy policies. What you have to decide is whether it’s the right choice.

Can you afford to replace all your possessions? Could you pay for alternate accommodations should your apartment become too damaged to live in? If you answer no to any of those questions, consider renters insurance. It can happen to you.

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