Renters insurance is just as necessary as homeowners insurance, even though you don’t have a lender forcing you to get it.
So what do you need to learn about renters insurance before you purchase a policy? Here are six renters insurance facts you may not know:
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1. You Aren’t Protected by Your Landlord’s Insurance
Many renters are under the mistaken assumption that a landlord’s insurance policy will protect them in case of a flood or fire. In fact, your landlord’s insurance policy only covers his property and possessions — generally just the property you’re living in and any appliances or furniture you’re renting along with it. Many landlords make this clear in leases and rental agreements.
There are some times when a landlord could be responsible for reimbursing you for lost items. For instance, if faulty electrical wiring causes a fire that may be the landlord’s fault. In this case, you may have to go through a lengthy court battle to be reimbursed for the items that you lost in the fire.
2. Not All Renters Insurance Policies are the Same
Like homeowners insurance, renters insurance policies can vary widely. You can get different levels of coverage, usually from $10,000 to $100,000. Also, some insurance policies will replace the items you’ve lost outright, while others will only give you the cash value of the items at the time they were destroyed. The first option — replacement cost coverage — is much better but also more expensive.
If you do take out a renters insurance policy, be sure that you understand everything that’s involved. Does your policy cover property damaged in a flood or other natural disaster? Does the policy cover the loss of personal items if they’re stolen from your car? Will the policy reimburse living expenses if damage to your rental property requires you to move?
These are all essential questions to ask when choosing your renters insurance policy.
3. It’s Cheaper Than You Think
Many renters avoid renters insurance because they think it will cost a fortune. The truth is that it doesn’t. The National Association of Insurance Commissioners puts the average price of renters insurance around $15-$30 a month. That’s probably less than you spend on coffee or movie tickets.
Your renters insurance premium will depend, in large part, on where you live. Some renters insurance quote tools, for instance, puts the premium for a $40,000-$50,000 policy in Staten Island, N.Y., at $8-$21 per month. A similar policy in the Bronx might cost $10-$27 a month.
It may even be as affordable as $5 a month with Lemonade. If you live in one of the states where Lemonade insurance is available, it’s worth investigating if it fits your needs. One of the stand-out features of the company is it’s Giveback program, where any unclaimed money at the end of the year is given to charity. If this speaks to you, give Lemonade a look.
4. Premiums Depend on a Variety of Factors
While renters insurance premiums are determined, in large part, by your ZIP code, they’re affected by other factors. How much coverage you need, whether you’re renting a home or apartment, and whether you’re located in a floodplain may all impact your premiums.
Also, your premium will be affected by the type of coverage you require. More comprehensive coverage will obviously cost more. But you can often save by boosting your credit score or getting a multipolicy discount by buying renters insurance from the company where you get your car insurance.
5. Your Possessions are Worth It
If you’re like many renters with furniture cobbled together from Craigslist and Goodwill, you may think you don’t have anything worth insurance. If we were just talking about your $25 couch, you might be right.
But how much would it cost to replace your computer? Smartphone? Clothes? Shoes? Dishes and kitchen utensils? Books? Hobby items?
When you start adding it all up, most of us have at least $10,000 worth of stuff that we’d need to replace if our entire apartment building burned to the ground. Start cataloging your possessions, and you’ll quickly find that they’re worth insuring, especially because rental insurance is so cheap.
6. Renters Insurance Protects More Than Just Your Stuff
Renters insurance policies don’t just protect your stuff. Renters insurance that comes with liability coverage shields you from paying medical and legal expenses if someone gets hurt in your apartment. If you have a dog, you may need even more liability coverage in case your dog bites someone.
While most of us will never need liability insurance, things can get very expensive, very quickly if you don’t have it when you do need it. A renters insurance policy that includes basic liability coverage shouldn’t cost too much more than one without it, so this is definitely something worth looking into, especially for pet owners.
(Just a note: If you have a breed of dog that’s considered especially aggressive, you may need to pay more for renters insurance, or you may be turned down for coverage.)
Renters insurance, like other types of insurance coverage, doesn’t seem necessary until it becomes necessary. But the fact is that many renters will experience damage from a fire or severe weather, a break-in, or other event while renting. So it’s better to just get renters insurance now than to regret not having it later.