Why you should get renters insurance (and how it can save you thousands of dollars!)
Most people who rent an apartment or home don’t realize that renters insurance can come with huge benefits. In addition, it is very affordable, ranging from $11-$16 per month. While some landlords might require you to have renters insurance, many do not. Before you decide this is not something you need, consider this situation. Mary, a fictitious student, went away on vacation to her home country in Sweden. However, when she returned home, she found out that her entire apartment had burned down, and all her belongings had perished in the fire. Now, because she had not purchased a renters insurance policy, she had to cover additional living costs as well as replace everything in her apartment on her own. In addition, trying to replace all of her school books and computers right before school started became impossible and she ended up having a very stressful semester. If Mary had purchased renters insurance, she would have been able to put the claim through to her insurance as well as get her accommodation costs covered. For such reasons, you should consider getting renters insurance and protect yourself.
BENEFITS OF RENTERS INSURANCE
1. Protect yourself from lawsuits
If someone gets injured in your home, you could be liable for their medical bills and court costs. Your renters insurance policy takes care of this for you, so you can sleep better at night.
2. Protects the contents in your home
Your landlord’s insurance doesn’t protect your belongings. You need your own rental insurance to protect all your belongings in your home. However, one key thing to do is to make a list of all your belongings in your home and take pictures or videos. This way, if you do need to put in a claim, you already have everything documented. This will also speed up the processing time of your claim. To help you with this, check out this tool provided by the Insurance Information Institute.
3. Protects your belongings when you travel
A little-known fact about renters insurance is that it protects your belongings even when you travel locally or around the world. Let’s say, for instance, your laptop is in your car, and someone breaks into your car and steals it. In that case, you can put in a claim through your rental insurance for your stolen laptop. Check with your rental insurance company for the details on this.
4. Landlord might require it
Most landlords do not offer coverage for your belongings. Their insurance will cover the building but anything within your living space needs to be insured by you. Also, having your own rental insurance means you should be able to rent at most places. Some landlords may even make it a requirement.
5. Coverage for additional living expenses
Should your apartment or home become unliveable, additional living expenses may be covered under your policy, including accommodation, food, etc. Check your policy for additional details and coverage limits.
SHOULD STUDENTS PURCHASE RENTERS INSURANCE?
While this is not on the top of a student’s list of things to do, I do recommend purchasing renters insurance for students. Most students barely have enough to make ends meet and/or they are in debt. Now, if your place got burglarized or burned down because your neighbor started an electrical fire, there goes all your stuff (your books, computers and other electronics, clothing). This could cost you thousands of dollars if you have to replace everything all at once. Your parent’s home insurance will not cover you since you are now living away from home and paying rent. The landlord’s policy will likely not cover anything either. And don’t assume that because your roommate has renters insurance, that you would be automatically covered. Rental insurance policies only cover the policyholder and their belongings. So you should either get your own renters insurance or get it together with your roommate.
HOW TO SHOP FOR THE BEST RENTAL INSURANCE POLICY
Not every policy is created equal. To ensure you what you need is covered, make sure you ask these questions first before signing the paperwork and paying. Also, make sure to shop around to get the best prices.
1. Is all my stuff covered?
Make a list of all your items using this tool, and ask the insurance company if there are any restrictions. Most times your furniture, books, electronics and clothing are covered. However, if you have special items, you should inquire about it.
2. What “perils” are covered?
Usually, you will be covered against fire, smoke, theft, explosions and water damage from burst pipes. However, storm coverage is not as clear cut. Any water that seeps into your apartment from a storm is not covered. And this can especially become an issue if you live in a basement or ground-level apartment.
3. Are my pets covered?
If you have a dog or a cat, and your pet injures another person, your renters policy will usually take care of that under the liability portion. However, you should always check with your insurance company as some breeds of dogs are not. Remember, this insurance does not cover the health of your pet. If you need pet insurance, you can try Veterinary Pet Insurance.
4. Are my belongings covered if they are stolen or damaged while I’m away from my apartment?
Most policies do cover this including if the damage is cause by fire, vandalism, and water from burst pipes. However, you should confirm this with the rental insurance company.
5. What happens if my friend gets injured in my apartment?
Liability coverage is another benefit offered by your rental insurance. If your friend (or a burglar) injured themselves while inside your home, then you are covered. However, if you sublet your apartment out in the summer, and that person gets injured, they are not covered under your policy. To circumvent that, you can do two things: 1. ask your insurance company about the details on that. 2. Request that the sub-letter get their own short term rental policy and make sure you have a copy of it.
6. Is this insurance company legit?
Make sure you choose a company that has been in business a while. You don’t want to have a claim and then find out your insurance company has skipped town or is making it very difficult to process your claim.
7. How much does the policy cost and what are my deductibles?
Renters insurance on average costs about $16 a month. Lendedu.com has an informative post on the 10 states with the highest insurance premiums and the lowest insurance premiums.
The cost of the policy will depend on which state you live in, as well as the replacement value of all your belongings. If you need help calculating the value of your belongings, use this handy tool which also serves as an inventory of all your items. Make sure to ask how much is your deductible. This is the amount of money you have to pay upfront before your claim can be processed. If you choose a higher deductible, then your monthly premiums will be lower. If you choose a lower deductible, then your monthly premiums will be slightly higher. On average, a higher deductible can save you about 10%. Just remember, if you do choose a higher deductible, then you need to have that cash set aside, in the event of a claim.
Some things you should also keep in mind with your renters insurance is whether your policy will pay Actual Cash Value (ACV) or Replacement Cost Coverage (RCC). ACV will pay you the value of your item minus the depreciation costs. So, if you paid $600 for a laptop that was stolen, you would receive the balance of $600 minus the depreciation costs minus the deductible, which could be around $300 (depending on how old your laptop is). RCC on the other hand will replace the item. Most renter’s insurance policies offer ACV. If you want RCC, you can inquire about it with your insurance company. However, keep in mind that this will cost you more.
TIPS TO SAVE MONEY ON RENTERS INSURANCE
1. Combine your renters policy with your auto insurance. Almost all insurance companies offer a multi-product discount.
2. Choose your deductible wisely. A higher deductible translates to more savings. A lower deductible means lower savings, but in the event of a claim, you don’t have to pay as much money to make your claim.
3. Live in a state with lower insurance premiums. I wouldn’t recommend you move to that state just for the insurance premiums but if you already happen to be in one of these states, then that is even more incentive to purchase renters insurance.
WHERE TO GET RENTERS INSURANCE
If you are not sure where to get renters insurance, here is a list of companies to get you started.
Bottom line: Renters insurance is important for liability protection as well as to protect your assets, for a very low cost. Give yourself peace of mind and get renters insurance.
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