Fire. Theft. Vandalism. Flooding.
Scary, right? Although we hope it won’t happen to us, anybody could be a disaster victim. And that’s why home owners have insurance—to protect the roof over our heads and replace possessions in case the unthinkable happens.
But what if you don’t own a home? If you’re renting, you may not be required to have insurance, but you should have renter’s insurance to protect yourself and your belongings.
What is renter’s insurance?
Renter’s insurance protects the stuff you own when you rent; your computer, clothes, furniture, jewelry, etc.
If your apartment burns down tomorrow, your landlord’s insurance isn’t going to cover this stuff. His insurance is going to pay for the building to be repaired, sure, but it won’t replace your one month-old MacBook Pro.
You may think you don’t own much, until you stop to think about what it would cost to replace everything in your apartment. Even with just a few gadgets, some furniture, and a small wardrobe, the value of your belongings can easily run into the thousands or tens of thousands of dollars. And because rental insurance is often very cheap, it’s good peace of mind.
How much does renter’s insurance cost?
Renter’s insurance premiums are usually affordable. When I used it, I never paid more than $9 or $10 per month in renter’s insurance. The National Association of Insurance Commissioners says that, on average, renter’s insurance runs $15 to $30 per month—of course this depends on the value of your belongings and other factors. It’s easy to get a no-obligation quote from your insurance carrier, or online through a major carrier like Allstate.
How do you get renter’s insurance?
You can get coverage through most insurance agents. If you already have auto or life insurance, check with your agent about adding a renter’s policy. The multiple policies will probably snag you a couple discounts, meaning lower rates for all of your insurance plans.
How much coverage should I get?
To find out how much renter’s insurance coverage you need, take an inventory of your belongings, especially the high value, antique, or collectible items that you own. Copy documentation and take pictures in case you do need to file an insurance claim. Also, keep a rough inventory of the rest of your stuff: clothing, small appliances, kitchen items, small furniture/accessories, etc. You can even maintain an online inventory for free at sites like Know Your Stuff.
After you take inventory of your items, your insurance agent can help you decide how much coverage you need. Have him or her decipher all the fancy insurance lingo for you so you can make the right decision.
The main thing to consider in renter’s insurance is “full replacement value” versus “depreciated value”. Most people recommend to go with full replacement cost coverage—even at it’s higher premiums—because you can replace any items you lose with new items. For example, if you own a five year-old TV at the time you file your claim with depreciated coverage, you would only be reimbursed for the amount that TV was worth. With full replacement coverage, you would be reimbursed for the amount it would cost to buy a new TV. This makes sense since you will, in fact, have to go buy a new TV if yours is lost in a disaster.
What else does renter’s insurance cover?
Other than coverings your belongings in case of a disaster, renter’s insurance provides two other big types of coverage: liability protection in case someone is injured at your place and temporary living, a paid-for place to live if your rental becomes uninhabitable for some reason (you know, like if it burns down). Both situations carry huge financial risk that can be avoided with an inexpensive renter’s insurance policy.
Like with most insurance, you’ll probably rarely (if ever) use your plan or file a claim. But many renters that have experienced disaster without insurance will probably tell you that it’s pretty stupid to not protect yourself when it can be done so inexpensively.
What about you? Have you used renter’s insurance? Has it ever saved you?