Why You Might Need Renter’s’ Insurance (Or Not)

Whether you live in an apartment, a rental house, a condo, a coop or even a duplex, at some point in your tenure as a renter, you’ll probably wonder whether you should get renter’s insurance.

When it comes to carrying insurance, doing so for your own house or a car is one thing…most people have no problem with getting sufficient insurance to buttress any possible accidents or liabilities resulting from a traffic accident or a house-related hazard.

But renter’s insurance is a whole ‘nother ball of wax.

When you rent, you don’t OWN the place but you’ve got a vested interest in it – big time! You’re the occupant! And you’ve got belongings which are of monetary and, perhaps, sentimental value to you.

“But shouldn’t the landlord’s insurance policy cover any damages?” you might be thinking.

It all can get a bit confusing.

So what’s the deal? Should you get renter’s insurance… or forego it, and just plan to tap your landlord or management company if there’s ever an issue?

First of all, the idea that your landlord’s insurance will cover damages to you or to your personal property is a fallacy. Your landlord’s property insurance policy only covers structural damage — not damage to your personal items – and not your medical expenses if something were to happen to you.

In the latter two situations, you’d definitely need renter’s insurance.

Now that we’ve got that bit of information out of the way, to help you make a decision, let’s explore the PRIMARY reasons that renters take the insurance plunge.

• A big – and perhaps the biggest – reason that renters have insurance is that they want to cover their belongings. Did you ever add up what your “stuff” is worth? Thousands, easily (counting electronics).
• There are certain liabilities that you need to think about. If you were ordering take-out and the delivery person slipped and fell on “your” property, s/he could ostensibly sue you. It’s far-fetched but it could happen.
• Did you know that a friend could sue you for the same reason if s/he hurt themselves while visiting you? These improbable scenarios are still potential issues; this is not to say they will happen – just that it’s better to be safe than sorry.
• Renter’s insurance probably falls within your budget. On average, it’s $185 a year or a little over $15 a month.
• There is a clause called “Additional Living Expenses (ALE)” in some policies, which covers your having to live someplace else if one of the covered hazards or perils were to take place. The expenses it extends to include food. It would be helpful, if you find you have ALE, to find out the length of time that such a temporary living arrangement would be covered and if there’s a maximum amount that can be covered.

So why don’t more renters have insurance? They believe that the landlord’s insurance covers them, and/or they don’t realize that their personal belongings would be covered even if they were on vacation, or if something happened to the belongings while they were driving. (That’s quite a benefit!)

Word to the wise: ask your agent to explain whether you’d have your valuables replaced with belongings purchased at current market value, which is known as Replacement Cost Coverage (RCC) or if you’d receive actual cash value (ACV).

You can take it from there. To get renter’s insurance or not? That is the all-important question, and one which only you can answer. Hopefully, the above information has put the topic somewhat in perspective for you.

Remember, think positively!