Renters insurance isn’t a legal requirement. However, mishaps or calamities don’t usually happen with prior notice. So, when they happen and damage all your personal belongings in a house you don’t own, will you be able to replace everything? Think we know the answer to that one! We can’t deny that more and more people are choosing to rent houses or rooms to save money for future investments or pay off pending loans. Because they’re living in rental properties, it becomes more critical to protect the things they own. However, statistics reveal otherwise. The Insurance Information Institute data tells us that according to a 2016 survey, only 41 percent of respondents had renters insurance. Of course, the percentage was worse in 2011 when only 29 percent had it.
Renters insurance encompasses many other benefits too. So, while disasters aren’t in our control, taking preventive measures to secure what we have is. Let’s look at six reasons that will give you an insight into why you should get renters insurance:
1. Landlord’s insurance doesn’t apply to you
There’s a common misconception among tenants that their landlord’s property insurance covers their belongings too. And let’s go ahead and say it: No, it doesn’t!
Your landlord’s insurance policy only protects the building or structure and the surrounding property. Let’s say your sofa gets destroyed in a fire or your PC gets stolen. Your landlord’s insurance policy will not cover any of this, but renters insurance certainly will. Today, most landlords need tenants to have renters insurance as a prerequisite for being considered a prospective tenant. It makes perfect sense, doesn’t it? Instead of waiting for you to drag them to court for damage to your items, they urge you to get renters insurance!
It seems like a win-win, doesn’t it? We believe so!
2. Your belongings are more valuable than you know
Many tenants believe they don’t own anything valuable to the extent that they need to be insured. According to Brandon Okita, vice president at FIA Insurance Services (Torrance, CA), tenants should take a closer look at all their cabinets, closets, and drawers and make a list of everything they own. It’s also a great idea to add a random price (based on your evaluation) to each item. When you add up the numbers, you might be surprised to find that what you have is worth a lot more than you give them credit for!
Depending on when you bought all the stuff, a revaluation would prove how challenging it would be for you to replace all your items! In the end, believe that your items are prized possessions that need to be safeguarded.
Here’s where renters insurance steps in! The policy covers items such as jewelry, clothing, furniture, luggage, computers, and gadgets. Interestingly, these policies (a standard HO-4 in particular) include an endless number of hazards you’re protected from, some of which are:
- Aircraft damage
- Explosion
- Vehicle damage
- Lightning or fire
- Smoke
- Theft
- Vandalism
- Volcanos
- Windstorms or hail
In a word, floods or earthquakes aren’t covered under standard policies, so you need an additional policy or rider to include them.
3. Renters insurance includes housing facilities for mishaps
Let’s assume your rental house or room gets destroyed by fire. You need a place to live while the house or room’s being fixed, don’t you? Renters insurance can take care of it. Policies term it as “additional living expenses” or “loss of use” and cover living and food expenses should you need to live in a hotel or similar place.
Finally, find out from your insurance company the duration of the benefit and whether there’s a limit to the amount they’re willing to dish out.
4. Renters insurance safeguards items when you’re traveling
Renters insurance doesn’t just protect your personal items when they’re in your rental house or room. They’re also covered even when you carry them while traveling or driving your car. One of the benefits includes losses due to theft, which is applicable should your laptop or mobile phone get stolen at a store or on the subway. The other benefit is ‘other covered losses,’ and safeguards your stuff wherever you may be traveling globally.
What falls under ‘other covered losses’? That’s a question best answered by your insurance agency.
5. Renters insurance provides liability coverage
You have a guest at home who accidentally falls and hurts themselves. Or you have a docile dog who seems moody and attacks your friend. Then your guest or friend decides to file a lawsuit against you for being injured at your home. What do you do? Can you afford the legal fees and medical bills?
Don’t fret because if you have renters insurance, you’re safe! Renters insurance includes what’s known as ‘liability coverage.’ When incidents similar to the ones we mentioned happen, it covers court judgment payments and legal fees with restrictions, as described by the policy.
Know that policies usually cover $100,000 in terms of liability coverage as well as a relatively lesser amount for medical expenses.
6. Renters insurance isn’t expensive
Many tenants refrain from buying renters insurance because they believe it’s beyond their budget. On the contrary, renters insurance is pretty cheap. On average, a renters insurance policy is $180 annually as per 2017 statistics, which totals $15 per month. And that’s not pricey!
Technically, a few elements will determine the real cost of renters insurance:
- Type of coverage selected
- Amount of coverage required
- Deductible amount
- Location (state)
You could also do something else to ensure that you pay a lower premium amount. Do you own a car? If you do, you could check with your insurance company whether they can combine your auto insurance with your renters insurance policy. Many agencies provide good discounts on multiple policies against a single one.
So, do you think you should purchase a renters insurance policy before you begin house-hunting and be prepared? Or do you believe you’re unnecessarily spending money on something that may or may not happen? As much as we’d like to, it’s not in our hands to predict the future, but it’s undoubtedly in our hands to be precautious. Should a disaster strike, that’s a lot of money down the drain if you think about it. If you’re still caught between a rock and a hard place about whether to invest in a policy, consider whether the things you own mean something to you. Let it go if they’re not worth the risk. But if it’s a tenant requirement, you have no other choice. Sleep on it before making a decision!