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When you rent a place to live, whether a single-family home or an apartment, your landlord is responsible for keeping it in safe, habitable condition. But when things happen that are out of their control, like severe weather that damages or destroys the property, who is responsible for replacing all of your belongings and helping you get back on your feet?
If you think that your landlord has you covered, think again. Unless you have the financial safety net of renters insurance on your belongings, you’re on your own to replace everything and cover your living expenses while you wait for repairs or find a new place to live. And if it turns out that something you did caused the damage to the property, you’re likely to be on the hook for those costs as well.
No state or federal laws require you to have renters insurance, but it’s becoming more common for landlords to stipulate that tenants provide proof of coverage as part of the lease agreement. Although only just over half of renters have a policy, according to SafeHome.org, the majority of them do so because the owner of their rental requires it. However, even if you don’t have to have a policy, the monetary safety cushion that spending just a few dollars a month provides is worth the investment.
If you don’t think that a renters insurance policy is worth the money, ask yourself this: do I have the money to replace my belongings if they are lost or stolen?
If you’re like most people, the answer is no. In one recent survey, more than half of adults reported that they couldn’t cover a $1,000 emergency expense with their savings. Instead, they’d have to use a credit card or borrow from friends, family, or the bank.
With that in mind, consider the total value of your possessions, which is likely to be significantly more than $1,000. Even if you have several months' worth of living expenses in savings, it’s unlikely to be enough to replace or repair everything you lost. In contrast, if you have renters insurance, you have a financial safety net and can avoid dipping into your savings or going into debt to finance your recovery.
A renters insurance policy is an affordable financial backup plan. The average cost for a policy with $15,000 of personal property protection is only about $150 per year; for $50,000 of coverage, you’ll only pay about $300 per year, or just over $1 per day. That’s a small price for greater peace of mind and knowing that you’ll have the money you need to recover if you lose everything to a fire, theft, or other incident that damages your home.
The most common reason renters purchase insurance is to protect their property. If a disaster occurs, your landlord’s insurance will cover the building and anything they own (like appliances and fixtures), but not tenant belongings. If you can prove that you sustained losses or property damage due to the landlord’s negligence, you may be able to get compensation through small claims court, but that can take months, if not years, to accomplish, and there’s no guarantee you’ll receive payment.
A renters insurance policy also protects your belongings when you aren’t home. For example, if someone steals your phone or laptop while you’re traveling, you can make a claim on your renters insurance to replace it.
However, in addition to covering your belongings, renters insurance provides two additional financial safety nets: liability insurance and temporary living expense coverage.
Liability insurance protects you against monetary losses when you or one of your guests damage the property or if someone gets hurt on the property because of you. If a court finds you liable for property damage or an accident, your renters insurance liability coverage will pay for medical bills, legal expenses, and settlements. The standard amount of liability coverage in most policies is $100,000, but you can opt to buy more insurance.
Temporary living expenses coverage will take care of any additional expenses you incur if your home is uninhabitable. These include hotels, meals, transportation, laundry, pet boarding, and more; in short, the insurer will reimburse you for any expenses above and beyond your regular bills while your home undergoes repairs or you look for a new place to live. Policy limits vary but are typically a percentage of your property coverage.
Some insurance carriers offer optional endorsements or riders to cover specific perils or losses. For example, if you have valuable items like artwork, jewelry, collectibles, and firearms, and their appraised value may exceed the policy’s item limits, you may want to add a scheduled personal property rider to cover their total value.
Other optional coverage to consider includes:
These riders will increase your premium, usually by a few dollars, but the extra expense may be worthwhile if you have these concerns.
Renters insurance is a powerful economic safety blanket, protecting you against financial setbacks that can ripple out into every aspect of your life. That said, it’s important to know what the policies cover (and don’t cover) to avoid unpleasant surprises.
One of the main reasons people decline renters insurance if they don’t have to have it is the presumption that they don’t have anything of value. However, even if you have hand-me-down furniture and a 10-year-old television, you’ll need to replace them if something happens, and the costs can add up. The personal property protection provided in a renters insurance policy will pay to repair or replace your:
When you purchase the policy, you can select either replacement cost or Actual Cash Value (ACV) coverage for your belongings. Replacement cost insurance will reimburse you for the cost of replacing the items at their current price, while ACV will only pay you the item’s current value, which is the purchase price when new minus depreciation.
Your renter's insurance policy only covers you and your related family members living in the same house. It doesn’t cover your roommate’s belongings; they’ll have to purchase their own policy if they want a financial security backup. If you are purchasing a policy for your entire family, make sure the personal property coverage limit is enough to replace everyone's belongings.
Renters insurance is a fiscal protection net against specific named perils. It doesn’t protect you against everyday wear and tear or accidents that damage your property outside of specific disasters. In other words, if your cat knocks the television off the wall and breaks it, you’ll have to replace it yourself.
That said, your policy provides a financial safety net against the most destructive disasters that can result in significant losses, including:
If you live in a flood or earthquake-prone area, consider investing in a separate policy to cover losses from those events and provide a money safety buffer.
Even if your landlord doesn’t require you to carry renters insurance, getting a policy is a good investment in your financial security and peace of mind. Whether you’re renting a tiny studio apartment in a major city or a large house in the suburbs, you’ll have the coverage you need to replace your belongings and fully recover from a disaster without falling into a deep financial hole.
Thanks to Insurdinary, getting the perfect renters insurance policy at the right price is easier than ever. Our easy-to-use quoting tool allows you to compare personalized quotes from leading insurance companies side-by-side to find the policy that works best for you. Just answer a few questions, get your quotes, and an Insurdinary agent will help you buy the policy and secure coverage in minutes.
Insurdinary is here to ensure you have the financial safety net you need by offering answers and help with all types of insurance. Our hassle-free process ensures you have all the protection you need at the best rates, so start your quote today and contact us with any questions.