Renters’ Insurance: Do You Really Need It?

According to Zillow, more than $440 billion was shelled out for rent payments in the United States in 2014. UPDATED INFO: That figure rose to $585 billion in 2015 and over $600 billion in 2016. These rising numbers are concurrent with the fact that the number of homeowners is steadily declining while the number of renters is consistently climbing. In fact, in the 10 year time period between 2004 – 2014, this country has seen its peak number of renters since the 1980s (NYT.com).

Given the huge number of Americans who are currently living in a rental (whether an apartment, duplex or single family home), the concept of renters’ insurance has automatically jumped into the hot-seat.

Historically, too many renters made assumptions about the protection of their belongings that ended up costing them large sums of money. For example, a common belief is that renters will be protected under their landlord’s property insurance policies.

Unfortunately that is a misconception that is all too often not clarified when the lease is signed. Typical homeowners’ insurance policies specifically state that any property belonging to a tenant will not be covered in the event of a fire, flood, or other natural disaster.

Additionally, should you or any of your guests be the cause of an accident in your rental that causes harm or injury – your landlord’s liability policy will not have you covered. This could end very badly with you being sued for damages, which could end up costing thousands of dollars.

Although some landlords require their renters to have their own renter’s insurance policy before signing the lease, not all landlords follow this practice. This means the decision is left up to the renter in many cases. Plenty of renters, when faced with the rising cost of rent coupled with the rest of their monthly bills, decide against renters’ insurance.

This is a very bad decision, for many reasons.

  1. Renters’ insurance is very affordable. It is a falsehood believed by many that renters’ insurance is expensive. Naturally, everyone’s policy and costs will vary, but on average you’ll pay a few hundred bucks per year – and that gets you half a million dollars in coverage!
  2. Medical bills can be astronomical. If one of your friends gets injured in your apartment and requires medical attention, s/he can sue you for the costs they incur. Your landlord’s policy will not help you out here, either.
  3. Your landlord may not have a security system in place, and they aren’t required too, either. This may mean that you’re at risk for break-ins and theft. Burglaries are common in big apartment complexes due to the large number of people and high activity that can act as a distraction. If you lose any expensive items to theft or vandalism, renters’ insurance will help you recover the cost.
  4. Natural disasters can destroy all of your property. While your landlord’s insurance policy will take care of the cost of repairing the structure of the building, your personal items inside your apartment will only be protected under renters’ insurance coverage.
  5. Accidents happen. Think about it: have you ever accidentally broken a window or left the bathtub water running too long? Any damage to your rental that is deemed to be your “fault” will be your responsibility.

When you consider the benefits of paying around $20/month, renters’ insurance is a no-brainer! Don’t pass on it just to save a few dollars. If you have an extremely tight budget, look for something less important that you can drop. Consider lowering your cable subscription, getting rid of your landline (as long as you have dependable cell service), cancelling satellite radio, or eating out less often. If you end up in one of the above situations, you’ll be extremely glad you decided to go for the renters’ policy.

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