A lot of confusing information regarding renters insurance has completely saturated the internet and has given millions of American’s a common mis-perception of the value and necessity of having renters insurance. The unfortunate popular belief behind renters insurance is that it is expensive and a waste of money. Furthermore, so many renters are under the false assumption that their landlord will cover expenses incurred do to apartment damage. The outcome of these false misconceptions is that people often find themselves in situations where they are stuck with the bill of having to pay to replace their belongings or fix apartment damage because they were unaware of the financial obligation they carried. Becoming familiar with what renters insurance really is and how it can protect your interests is the first step to making an informed decision.
If You Rent, You Need Renters Insurance
Let’s start with the basics behind renters insurance. The purpose of a renters insurance policy is to cover the costs of replacing your belongings in the event of an unforeseen circumstance such as theft or damage from flooding or fire. If you come home to find your apartment or home has been broken into and everything you own is gone, you will be the one left with the cost of replacing everything you own. At first this may not seem that expensive if you don’t own high price jewelry or electronics, but the cost of refurnishing an entire apartment can be enormous. On average, a renter will spend between $10,000 – $15,000 to replace everything in their home or apartment. The same is true in the event of a fire, flood, or other disaster that severely damages or destroys items in your home.
People will often convince themselves that these events will not happen to them, so they don’t need to worry about how to afford the cost of replacing or repairing their home. Unfortunately, these things do happen far too often to ignore. It doesn’t matter what neighborhood you live in or how many fire alarms your building comes equipped with, robberies can happen to anyone and fires can quickly rage out of control at any given moment.
Renters insurance isn’t just for major disasters such as a fire or robbery. Renters insurance can be a helping hand for even smaller situations, such as a flooded bathroom. Landlords carry insurance policies on their units, but these are limited to circumstances caused by the landlord. Costly damage can still occur, such as leaving the bathtub running to the point it floods the bathroom and other areas of the apartment, or a small kitchen fire that destroys cookware and causes damage to the stove, walls and ceiling. These events will immediately put the burden on the tenant to pay for repairing any damage to the apartment, as well as the responsibility of replacing your own items.
Different Types of Coverage for Everyone
There are lots of different policies available to someone looking for renters insurance. There are cash policies that will essentially cut you a check in the event something happens. There are other policies that are more structured and item based, and can be very good for people with high cost items in their possession. The difference between policies can be significant when deciding what type of policy will fit your needs.
First, you need to know that with most policies your insurance company will base their payout amount on the depreciated value of your item. That means if you list a new television on your policy and a year later something happens and you need coverage, the policy will only pay out the value of the television as of that date- meaning it will reflect its loss of value since first purchased. These types of policies tend to be the most inexpensive and can provide decent basic coverage for a budget shopper.
If you do own more expensive or newer items and want to maintain that value in the event of damage or theft, you will want to choose a policy that will pay new market value for your items. In the television example, your policy would pay you the value of your television if you bought it today.
Choosing the right renters insurance policy will take a little bit of homework on your end. Try to itemize everything in your home and get a rough estimate on value. Keep receipts for larger purchases such as televisions, computers, and jewelry. Photos are also helpful, as they can prove the value of your item later, and should be kept in the possession of a third party.
Finally, another little known fact about renters insurance is that it doesn’t just apply to belongings inside your home. Many policies cover items outside the home, and some will even cover damage incurred from a car break-in.
Renters Insurance is Affordable
No matter what your budget, there is a renters insurance policy that you can afford. Renters insurance prices range from $15 to $40 a month, depending on the level of coverage you choose. Not only is prices low, but you can get them even lower if you are smart about shopping. First, combining your policy with other insurance coverage such as auto or health can lower your renters insurance quote and also lower your renters policy price on your other insurance policies. Next, be sure to shop for discounts, such as student and military, which will also see your policy price drop.