While most people know how important it is to have homeowner’s insurance, many never stop to consider whether renters also need to protect themselves. Renter’s insurance is a type of insurance that protects the renter, as well as their property.
Just like other forms of insurance, customers will choose their amount of coverage and deductible, and be then required to pay a monthly premium based on these, as well as a few other, factors. The amount of coverage that a renter chooses should account for the value of their belongings and offer enough coverage that they are adequately protected in case of an emergency.
Renters can choose from policies that will pay the replacement cost or Actual Cash Value (ACV) of their belongings. Policies that cover the actual cost of replacing items, rather than their depreciated worth, or ACV, are more expensive. However, these policies will be worth the additional cost if a renter should find him or herself in a situation where their belongings need to be replaced.
For example — If you paid $500 for a computer you would think that’s what you would get if something should happen to it, right? Not necessarily. With Actual Cash Value (ACV) the insurance company takes into account how long you have owned the computer to figure out it’s value. It’s like if you were selling it on Craigslist. You wouldn’t get the new value of the computer. You might only get $100 of that $500 you paid. And if you need a computer you would have to shell out the difference to buy a new one. This is a bit of information many people don’t know about or understand until they need to make a claim.
Most renter’s insurance policies will also offer liability coverage. Customers may also choose how much liability coverage they need, depending on their budget and the amount of protection they feel most comfortable with. Liability coverage will help protect a renter if they are sued due to an accident that happened in or on the property they rent. (Imagine you host a party and a friend’s friend comes and trips on your carpet and breaks their wrist — You are at risk of being sued for liability.)
Five Reasons Why You Need to Protect Yourself with Renter’s Insurance:
1. Renter’s insurance will cover the cost of belongings lost in a fire, due to lightening, a windstorm, or hailstorm.
Losing your belongings in a fire or storm can be devastating. Luckily, those with renter’s insurance are covered in these situations and can be compensated for their loss.
2. Renter’s insurance can protect you from theft.
While these policies cannot actually stop a theft from happening, they will cover the cost of lost items. Depending on whether a person chose ACV or replacement cost personal property coverage, the insurance company will cover the depreciated value of the stolen items or the cost to replace them.
3. If your home is damaged and uninhabitable, renter’s insurance can cover the cost of other living arrangements.
Most people don’t have the money to pay for a hotel while their home is being repaired. Luckily, renter’s insurance will cover the cost of a customer’s living arrangements until their home is again inhabitable.
4. Renter’s insurance covers the costs of accidents that occur on a renter’s property.
If a person is hurt while on your property, you may be held liable, even if you aren’t necessarily to blame. The liability coverage in a customer’s policy will protect them from being sued for medical bills or other costs.
5. If a person loses important items while traveling, renter’s insurance can cover that too.
Losing a suitcase while traveling is extremely frustrating. Most airlines will only reimburse customers up to a certain amount, which may be less than the lost items were worth. Fortunately, renter’s insurance may cover the remaining cost of the lost items, which makes these policies all the more valuable to renters who frequently travel. (Renter’s insurance can also cover an engagement ring, though you will have to have it appraised for the insurance company. If you recently got engaged you want to make sure that little rock is protected!)
Don’t make the mistake that many people do and think the one that owns your apartment will have insurance and you are taken care of. Fact is, their insurance will cover the physical home but not your belongings or liability.
Also don’t make the mistake of thinking you don’t need renter’s insurance because your stuff isn’t that valuable. Unless you have enough put away to cover theft costs or liability costs, you need to make sure you are covered.
Truth is, renter’s insurance is a fraction of the cost of homeowner’s insurance and depending on the coverage you need, you may find the cost is pretty low (could be from about $100 and up a year, depending on your needs). And with many insurance companies, if you bundle your renter’s insurance with something like automobile insurance you will probably get a discount. Also check with your employer and see if there are any company discounts on insurance plans. The cost of the insurance will be well worth it should something happen to your apartment!
Looking for renter’s insurance? Give Liberty Mutual a try.
{ 19 comments… read them below or add one }
It’s a good idea to have renter’s insurance. I was renting 2 years ago in the general area of Washington DC. I had insurance of Audio and Video equipment, furniture and all the items I owned inside the apartment. The cost was $109 for the year for $20,000 insurance.
Renter’s insurance is especially important if you have a specialty item like audio equipment in your home!
Thanks for the example.
On a side note about renters insurance, it is very cheap, and if you combine it with your auto policy, you can get discounts. I discovered that I could get the cheapest renters policy my insurer offered at $4/mo, and it would save me $16/mo on my auto due to the multi-policy discount! Done deal!
When I combined my home insurance with my auto policy I saved a good deal! If you are happy with your insurance company then it’s definitely worth looking into adding your policies with the same company.
I would add renter’s insurance like homeowner’s covers possessions in your car and elsewhere when traveling or just transporting them.
It can. Just make sure you understand what your policy actually covers.
I don’t have renter’s insurance, but my boyfriend does (and we live together). So if someone gets hurt in our apartment, I hope his coverage will cover it. Otherwise, the total sum of my belongings is worth less than $2,000 and I have family near by that I can stay with. I feel okay with not having renter’s insurance, although if something changed (i.e. I move out of an area where I do have family and I am living alone), I would get renter’s insurance.
I can’t speak for how his coverage would cover you. But his having coverage will protect the majority of belongings in the apartment (appliances, furniture, etc…).
Definitely worth it imo. My tenants had their laptops stolen, and renters insurance paid for it.
Thanks for the perspective from a landlord!
I never carried renter’s insurance but I’m seeing the importance of it more now. First off, it’s very cheap.
Secondly, I married a man who volunteers with the Red Cross. He’s on call to help people burned out of their homes by providing for their immediate, basic needs (very few are homeowners; most are renters). The vouchers from the Red Cross are a big help, but they don’t go very far in replacing people’s belongings. These folks are basically starting over.
That’s the thing with insurance, isn’t it? You don’t think about it or even consider it until something bad happens.
Thanks for your take!
My little brother just had his apartment broken into and his macbook pro, xBox, and keyboard stolen. They were all old and busted and he got a check for $1900 from renter’s insurance!
If I’ll goes as planned, I’ll be paying “Homeowners Insurance” instead of “Renter’s Insurance” before too long, right?
Save and make the right financial moves and you just might be paying homeowner’s insurance before long. Just make sure you really are ready for it.
Great points Glen, renters insurance is considerably cheaper than home insurance and when you buy it from your existing auto insurance company and inquire about a multi-policy discount, they typically offer 10% savings on the total premium for both policies. So, if your auto insurance costs 150/month and your renters insurance only costs 16/month, you’re pretty close to getting a policy for free. Regarding the landlords perspective, I just thought I’d notate that many landlords are now requiring their tenants in the lease to purchase coverage so they obtain additional liability protection in case someone is injured on the property.
My son is renting an apartment in Chicago that requires him to get renters insurance. If he does not the property will fine him $250.00 a month. He asked my husband to put it on his homeowners policy since this was the way his roommate would be handling his, at a cost of $15.00 a year(I think). My husband refuses to do this because he has said we will lose our home if anything goes wrong within the apartment. I don’t know if this is true, so that is my first question. Secondly, what can my son do at this point? He’s 20 yrs old and does not have a car, so no auto insurance to add on to. Is there a way from him to buy a policy on his own?
Having auto insurance isn’t a requirement for renter’s insurance. He should be able to check around a few companies for quotes on his own.
I’m also not sure about you losing your home if you add your son to your home policy. But I’m also not sure how this is done exactly and whether that’s really allowed. Certainly it could cause your insurance to go up should there be a reason for the insurance to be used. You could call your insurance and ask them if it’s a possibility to add your son’s renter’s insurance to your plan and what the repercussions are if the insurance is used (if something happens).
You could call also call your insurance company on your son’s behalf and ask what his renter’s insurance would cost on his own. Perhaps they would give you a good rate because you are already a customer?
And make sure to ask about any possible discounts. Your son may be eligible if he’s a member of any organizations or because of the school he’s going to? You never know until you ask!
My boyfriend was telling me that a friend of his wanted to get renter’s insurance, but his lease forbids it. Is this legal?
I couldn’t say if it was legal or not but it does seem strange. My first thought is to ask if it is a legal apartment? I’m thinking that if someone converted their basement into an apartment that they might not want a tenant getting insurance. But that’s just my speculation.