The Importance of Renters Insurance
September 12, 2014
Did you know that most landlords’ insurance only covers the building itself, not what’s in it? That means your computer, your guitar or any of your valuable possessions may not be covered if lost, stolen or damaged. According to statistics, over 40 million renters lack insurance for their rental, which puts them at risk if there were to ever be a tragic event in your apartment building. Don’t become a statistic. For approximately less than the cost of a monthly pizza night, you can insure your belongings and avoid financial consequences.
1. Your landlord’s policy doesn’t cover your personal property. Often, renters assume that their property’s insurance policy covers them in the event of trouble, such as a fire, flood, power outage that damages personal property, or burglary. Only when the worst happens do they discover that the landlord’s policy only covers the building, not the tenant’s personal property. Renters insurance protects you against financial loss, providing money you can use to replace or repair your personal belongings. Typically, a landlord will only reimburse a tenant for personal property if the damage or loss resulted from the landlord’s negligence. Check your lease for any clauses that discuss personal property.
2. You need liability protection. Accidents happen, and even as a tenant, you may be liable for personal injuries affecting your guests or neighbors. For example, if a guest slips and falls in your apartment they may seek injury compensation from you. Likewise, if your pet bites a neighbor or a service technician, you could face a liability lawsuit. The same applies to common household mishaps, such as overflowing tubs that send water gushing down over a neighbor’s personal belongings. Renters insurance provides financial protection for such situations.
3. Replacement costs can be high. Perhaps your television is an older model and you purchased your dining room set second-hand. Even in such cases, replacement costs can be high, and renters insurance provides a way for you to replace your possessions without undue stress or financial hardship. While replacing one or two items might not break the bank, consider the cost of replacing all or most of your belongings after a fire or flood. The cost to replace the personal property in a one-bedroom apartment with a single occupant would easily exceed $15,000. Also, be sure to document your items so you can prove to your insurance company exactly what you owned.
4. Renters insurance can be inexpensive. While renters insurance premiums do vary, policies are generally priced to minimize their cost and fit tight budgets. If that’s not enough encouragement for you, consider that policies are usually dependent on the estimated value of your household possessions and the typical risks you face. For example, if you don’t need flood insurance, your premiums may be less than those paid by renters in flood zones. Additionally, if money is tight, some people opt for higher deductibles, which typically result in lower premiums. While this strategy can lower premiums, keep in mind that you have to pay the deductible in the event of a claim. For example, if you have a $500 deductible and experience $5,000 in losses, you will have to pay that $500 out of pocket. Opting for a higher premium instead may be a better option if coming up with a lump sum of cash will be difficult when you’re filing a claim.
5. Replacement cost policies give more bang for your buck. Some renters insurance policies provide actual cash value in the event of a claim. This means that the insurance company will pay what your property was worth at the time of the theft, damage, or loss. Since personal property depreciates, this could leave you very low on funds for replacing your property with brand new purchases. In contrast, replacement cost or replacement value policies pay the amount it will cost to replace the lost or damaged item at current prices.
You can contact your property manager for more information on obtaining renters insurance!