Do you think you need renter’s insurance? Which of Paula Pant’s reasons for buying makes the most sense for you? (She had us at “It’s affordable”.)
Confession: When I was a renter (just four short years ago), I didn’t carry renter’s insurance. I reasoned that I didn’t own anything worth insuring: My furniture came from the “free” section of Craigslist, my clothes came from thrift stores, and even my computer was an old hand-me-down. My most expensive personal possession was a $200 snowboard.
I wasn’t alone in this thinking. As many as two-thirds of renters admit to not having renter’s insurance—a major risk they’re taking because they don’t think they need it, don’t know what it entails, or just haven’t gotten around to looking into it.
If you’re part of this group, you could be taking an unnecessary risk with your belongings—and your finances. Here’s why you should really think about getting renter’s insurance, even if you think you don’t own anything worth covering.
Your Personal Property Can Add Up
You may not think your possessions are worth that much, but you’d be surprised. In the event of a catastrophic event like a fire or a burst pipe, you can lose absolutely everything, and the costs add up a lot faster than you might think.
Remember, renter’s insurance doesn’t just cover the big stuff. It also covers all of the personal property within your rental unit, including:
- Furniture and mattresses
- Any appliances you bought on your own
- Electronic devices (smartphone, TV, computer, iPod)
- CDs and DVDs
- Clothes, shoes, and jewelry
- Luggage and handbags
- Dishes, cookware, and kitchen gadgets
- Decorations (rugs, curtains, etc.) and accessories
- Musical equipment
- Sports and fitness equipment
- Pet products
- and more
Even if your apartment is furnished with hand-me-downs and your wardrobe comes from thrift stores (ahem), the prospect of replacing it en masse in the event of a loss is probably not the sort of cost you can accommodate in your budget.
It Protects You Against Theft
Renter’s insurance also covers your belongings in the event that they’re stolen. Your landlord’s insurance policy has no obligation to reimburse you for anything that is lost or damaged within the confines of your rental unit. In other words: If a burglar breaks in, the responsibility to cover the cost of your personal damages is squarely in your hands.
Some policies also extend to cover your possessions while you’re away from home—check for a section within the policy known as “off-premises theft.” This can insure your bicycle, for example, if you’ll be cruising down the California coastline on two wheels, or your backpack filled with electronics if you’re staying at youth hostels in Europe.
It Can Give You a Place to Stay
If your home becomes uninhabitable due to an event like a fire, renter’s insurance can help you pay for a place to stay while you’re displaced. The last thing you need in a traumatic time like this is to worry where you’re going to sleep while your place is being rehabbed. Again, not all policies offer this coverage (and some only carry it as a “rider,”) so read the fine print carefully.
It Protects You Against Liability
Renter’s insurance doesn’t just protect you in cases of disasters and theft, it also covers your liability in the event that someone is injured in your home. Many standard policies provide as much as $100,000 in liability protection against accidental bodily injury. If you throw a party, for example, and someone falls off the balcony, you can rest assured that you have some liability protection against lawsuits and claims.
If you’re thinking of skipping renter’s insurance to save a buck or two, you’re being frugal in the wrong direction. Depending on the value of your personal property, you can get renter’s insurance for as little as $20 per month—and when you consider how much it would cost to replace all of your personal belongings, that’s an investment worth making.
An Extra Word on Flood/Water Backup Insurance
If you live on the ground floor in an area that’s prone to flooding, you should also consider adding a flood insurance rider to your policy. Standard policies will not cover water damage caused by a rising river, tidal wave, or storm, and you don’t want to find out about this policy limitation the hard way.
If you live in a basement apartment, you should also think about adding water backup coverage, which covers you in the event that your building’s sump pump fails. Even a brand new sump pump can stop working if the power goes out, and any water damage to your belongings in this instance, even during a storm, does not constitute flood damage.
The Bottom Line
Simply put, all renters should carry renter’s insurance. It’s relatively inexpensive, and you don’t want to play a game of risk with your personal belongings.
In hindsight, I realize I was playing Russian roulette with my finances during the years when I didn’t have renter’s insurance. Although I didn’t own anything expensive, the cost of replacing all of my personal belongings would have instantly catapulted me into a bad situation. I got lucky; some people skip insurance and get stuck with thousands in unexpected costs as a result.
Insurance is meant to cover you in the event of the unexpected. You hope you’ll never need to use it, but if you ever do, you’ll be glad you have it.
Paula Pant quit her 9-to-5 job, traveled to 33 countries,
launched a business she runs from her laptop,
and uses the profits to invest in real estate.
She shares details about these adventures and more on
her website, Afford Anything.