“Renter’s insurance? No, I don’t need that. I don’t really have that much ‘stuff’ and anyway, won’t my landlord’s policy cover what I do have?”
These are probably two of the biggest misconceptions regarding renter’s insurance. In today’s challenging economic environment, the financial burden of replacing personal belongings damaged by fire, wind, certain types of water damage, vandalism or theft can be significant, even in a one person household. And the landlord’s policy generally covers only the building and will not provide any coverage for personal property belonging to the individual tenants.
And for college students living either in dorms or in off-campus apartments; do you think you’re safe because you’re covered under your parents’ homeowner’s policy? Even here the answer is “maybe”. While it is true that most homeowner’s policies do provide some coverage for students away at school, the coverage is often for a very limited amount, such as 10% or less of the personal property limit that exists on the homeowner’s policy. So, if Mom and Dad have $50,000 in personal property coverage for their home, Junior will only have $5000 in coverage at college. In a dorm room, $5000 might be sufficient. But if Junior has an off-campus apartment, $5000 probably won’t go very far in the event of a total loss.
According to the Insurance Information Institute, about 57% of individuals renting apartments or homes are uninsured. When you take into consideration the fact that apartment buildings and rental homes may be older and not as well maintained as single family homes that are occupied by the owner, these uninsured tenants may well be in a very precarious situation. Electrical problems, older or faulty appliances and the smoking habits of neighboring tenants may increase the risk of fire. Outdated plumbing or poorly maintained basement apartments present prime opportunities for water damage. And certain areas of the country may be more prone to natural disasters such as tornados or hurricanes which almost always result in significant damage to property.
Most people have far greater amounts of personal property than they may realize. Don’t believe it? Consider doing a room-by-room inventory of everything you would have to replace if your apartment were destroyed by a fire or tornado for example.
Starting in the living room, even the most Spartan apartment will have at least one sofa, table, chair, and lamp as well as rugs, artwork and window treatments. Don’t forget to include books and non-built in book cases and the contents of any closets which might include winter coats, sports equipment like tennis racquets, bowling balls, skis and snowboards, musical instruments and golf or fishing gear. And if you added a window fan or air-conditioning unit that wasn’t provided by the landlord you’ll want to be sure to include that as well.
In the kitchen and dining area, there may be a table and chairs, small appliances (blender, toaster, non-built in microwave), glasses, plates, silverware, cooking utensils, pots and pans as well as all the food in your pantry and fridge.
In the bedroom and bathroom you would probably want to replace the bed, bedding and towels. And don’t forget personal items. Are you one of those people who shops at discount clubs to stock up on things like soap, toothpaste, mouthwash, deodorant, and laundry and dishwashing detergent? How much would it cost to replace all of that? And oh, don’t forget that disasters like fires or tornados generally don’t give you time to pack a suitcase. Having “nothing to wear” will suddenly become more than just a figure of speech!
Add to this the cost of higher end items like your flat screen TV, DVD player, stereo, CD collection, computer, printer, scanner, fax machine and any jewelry and the loss can quickly add up to tens of thousands of dollars.
For those renting an entire house, rather than just an apartment, the chances for loss are even greater. Items located in the basement or garage of a rental home could include work benches and tools, exercise equipment, luggage, garden tools, lawn mowers and patio furniture. These can be “high ticket items” and will quickly add up.
In addition to protecting physical property, a second important feature of most renter’s insurance policies is the personal liability coverage provided. Accidents happen and unfortunately lawsuits often follow. If your dog bites a neighbor or a friend slips and falls on a spill in your kitchen during a party, the personal liability coverage provided under your renter’s insurance policy can help if you find yourself being sued for medical expenses or the pain and suffering of the injured person. Or, if a flower pot from your balcony falls and damages the barbeque grill sitting on the balcony of your downstairs neighbor, personal liability coverage can help if your neighbor decides to hold you responsible for the damage.
Another bonus for purchasers of renter’s insurance is a coverage sometimes known as “Additional Living Expenses”. If your apartment burns down, one of your first main concerns will be finding a new place to live. But, suppose the only place you can find is $100 more per month than the old place and you must come up with first and last month’s rent and another security deposit before moving in? And suppose also that the fine print in the lease on the damaged apartment makes it clear that you are still responsible for paying rent for the old location (even though it is now only a pile of rubble) until the end of your lease? Additional living expenses coverage will help in defraying these types of unexpected costs.
Finally, renter’s insurance is generally a very good value and usually very easy to obtain. Many companies allow you to compare prices and purchase renter’s insurance online. And while prices will vary by geographic area, the average renter’s insurance policy will probably cost around $150 per year. On a monthly payment plan, which many companies do allow, that averages to about $12.50 per month or 41 cents per day.
When paired with automobile insurance many companies will offer even deeper discounts on both the renter’s and the auto policies. In addition, some companies also have “customer loyalty” discounts in which customers are awarded premium reductions based on the number of years they have been insured with the company. Starting out with a renter’s policy early on allows you to build tenure with a particular company which may qualify you for a fairly significant discount when you are ready to buy a home and “graduate” to a regular homeowner’s policy.
With so much at stake and costs that are far less than a daily cup of coffee why wouldn’t you have renter’s insurance?
Insurance Information Institute. www.iii.org