Four Lies about Renters Insurance

Almost all homeowners have home insurance, but this trend somehow doesn’t carry over to the realm of renting. An estimated 57% of renters do not have renter’s insurance, which is baffling when you consider what a risk it is to go without. Perhaps the root cause behind this phenomenon is simply misinformation—renters either misunderstand or don’t understand what renter’s insurance is and why it’s important. In our opinion, renters hold a wealth of misconceptions about renter’s insurance, and we’ve taken it upon ourselves to disabuse you of these notions. In what follows, we’ll address the four biggest lies circulating about renter’s insurance.

1. My landlord’s insurance policy covers everything I need. Think again. Typical landlord insurance policies only cover structural damage to the actual building, and even that is not a sure thing if a tenant is found to be responsible for the damage. For example, if you inadvertently leave your sink running and it overflows into your downstairs neighbor’s unit, you will probably be held liable for the entire incident. If you had a fire in your building, your landlord’s policy would pay to replace or repair the building, but not any of your belongings.
2. I can’t possibly afford it. Who wants another bill to pay every month, right? Well, not having renter’s insurance will actually end up costing you more in the long run. Policies are extremely affordable—about $10-$20 per month. A survey done in 2002 found that the average policy ranged from $12 to $17 per month for $35,700 of coverage and a $500 deductible. If you want a policy but really want to cut costs, you can always go with a higher deductible, which will in turn lower your premiums. If, on the other hand, you would like a higher level of protection you can go with replacement value coverage, which reimburses you to buy your lost possessions new instead of giving you their actual cash value (which factors in depreciation).
3. I live in a really nice complex, so I’m not concerned about security. Renter’s insurance covers a lot more than just losses from theft that occurs on-site. For instance, if your luggage were stolen while you were vacationing, your policy would probably cover you. In addition, renter’s insurance provides important liability coverage, which protects you in the event someone is injured in your home and sues you.
4. My things are not valuable. You may not live like a king, but all of the items you’ve collected over your lifetime can quickly add up. Think about all the books, CDs, DVDs, kitchen appliances, furniture, clothes, etc. you have. Most renters have about $30,000 of belongings in their rental units, which is a lot to lose in the event disaster strikes. It makes the $12 per month cost seem paltry by comparison, doesn’t it?