Why you need renters insurance
Most people renting homes or apartments just don't realize all of the benefits that come from having a renters insurance policy. Maybe you just assume that any damage to your personal property can be included in your landlord's insurance policy. If that's the case you're making a big mistake. Most rental property owners purchase just enough insurance to repair or replace their structures. Insuring your personal items and property is up to you.
In an unlikely event such as theft or fire where you suffered a loss of your personal property. Your landlord may be sympathetic but he or she will likely have zero liability for replacing your property.
Renters insurance helps protect against losses from such mishaps as theft, fire, lightning, vandalism, windstorms and water damage from broken water pipes. It is basically the same general personal property coverage as homeowners insurance but applies to renters.
If your home or apartment should become uninhabitable, your renters policy can typically help address some of the costs. This can help you afford living elsewhere short term. This benefit can include the cost of meals, over and above your normal living expenses.
Renting a home or apartment is a popular lifestyle option. Yet the importance of renters insurance has yet to be embraced by the majority of tenants. A 2016 poll conducted for the Insurance Information Institute (III) found that 41 percent of tenants had renters insurance policies.
Some renters may assume they just don't have that many valuable items to make buying a insurance plan worthwhile. However, they don't realize that the cost of replacing clothing, furniture, computers, TVs and household items can add up to thousands of dollars.
Which Type Of Policy - Actual Cash Value vs. Full Replacement
An important decision for renters is whether to choose a policy that covers the full cost of replacement or actual cash value.
With actual cash value coverage, insurance companies depreciate lost or damaged items based on their value. For example, if you owned an old bicycle that was stolen, the amount insured would be the actual cash value to replace the bicycle. Meaning the cost of buying a used bicycle of comparable age and condition.
If your policy covered your bicycle at full replacement value, you could be reimbursed the cost of a new bicycle of the same quality.
Renters Can Also Have Liability Coverage
Renters insurance can do more than protect your possessions. It can also cover you from allegations of negligence. Similar to homeowners insurance. Your renters policies can cover your liability for injuries or property damage caused to others by you.
For example, if you hosted a party and someone slipped or fell and was injured. You could be liable for their injuries. Having liability coverage included in your renters policy could protect you if you were found to be negligent and caused the injury. In this situation, the policy would also pay for your legal defense.
Be wise and choose a renters policy with a liability limit that's high enough to protect your personal worth.
Just How Much Will A Renters Policy Cost?
Considering the broad protection they offer, renters insurance policies are relatively inexpensive. The national average renters policy premium in the U.S. is $179 annually with some states more and some less. The cost is low because renters don't need to buy insurance to protect their homes, only the contents.