Renters insurance is one of the most neglected and important types of insurance out there. The statistics vary, but a glance at surveys and reports will show you that at least over half of renters don’t have renters insurance at all. There are a few reasons why this could be; people tend to think that renters coverage is much more expensive than it actually is, or they just don’t understand its importance. The truth is that renters insurance is cheap, and it protects you from risks you might not have thought about.
To understand why renters insurance is so important, let’s start with the basic premise: your landlord’s insurance will not cover your stuff in the event of a disaster. A landlord’s coverage will pay for the entire building, but as far as replacing the contents of your apartment or rented home, you’re on your own. If you’re renting, your place is at just as much risk, if not more, than a homeowner. You might think that you’re responsible enough to not set all your stuff on fire, but maybe your fellow tenants aren’t. Also, renters tend to experience much more theft than homeowners. Renters insurance will protect you from these risks, and coverage typically costs only $60 to $200 per year. We’re talking about substantially less money than you probably spend on clothes each year.
Now that we understand how important renters coverage is, let’s go over how it works. Renters is a lot like homeowners insurance in that it provides coverage for personal possessions, liability, and additional living expenses. If water seeps into your apartment and ruins your stuff because your tenant upstairs left the water running, your renters insurance will cover your possessions. If your disgruntled neighbor decides to sue you because she hurt her back while helping you move some furniture, your liability protection will help cover you against the lawsuit. This liability coverage also includes no-fault medical coverage, so you might be able to convince her not to sue by getting your insurance company to cover those injuries. If you have to live somewhere else because your apartment complex nearly burned down, your additional living expenses coverage will pay for your hotel bills and meals while your room is being repaired. The only disasters that renters coverage tends to exclude are floods and earthquakes, although you may be able to add an endorsement to your policy for this coverage if necessary.
To find the renters policy that’s right for you, it’s a good idea to do the same kind of prep work that you’d do for all other types of insurance. First, take a look at how much coverage you need. Taking an inventory of all your possessions is a good start; this will give you an idea of how much coverage you need, and it’ll also make it easier to file a claim in the future. As with homeowners insurance, you’ll need to decide between replacement cost and actual cash value coverage. An actual cash value policy pays to replace your possessions minus a deduction for depreciation. If you’re willing to pay about 10% more, replacement cost coverage is well worth it because it will pay for everything regardless of depreciation. Renters insurance requires you to pay a deductible before the coverage kicks in; this typically ranges from $500 to $2000. A higher deductible means a lower premium, so go higher if you can afford it. Make sure to note any especially valuable possessions, such as jewelry or musical instruments, as these may require a floater (a policy endorsement that provides additional insurance). Lastly, don’t forget those discounts. Already have a life or auto policy with Farmers? You’ll get a discount. If you’re a doctor, teacher, engineer, police officer, or another selected professional, your premium will get even lower. Insurance companies like it when you keep your property safe, so not smoking will get you a discount also. You can do even more for your safety by installing an approved security or fire protection system, as this will take off another chunk of that premium. Now you’re ready to talk to your agent and add yourself to the list of responsible, well-protected renters.