Money Management

Renters Insurance – Answers to 5 Common Questions

Have you ever heard of renter’s insurance? Do you need it? An important part of finding financial freedom is understanding how to best protect your assets. Let’s learn a little more about renter’s insurance so that you can make an informed decision about whether or not you need a policy.

What is renter’s insurance?

For those that own homes, homeowners insurance, usually required when you get a mortgage, covers both the structure of their home and their possessions inside. If you rent you don’t have this protection. Many renters make the mistake of assuming that their belongings are covered under their landlord’s insurance policy. This is not true. Without a renter’s insurance policy you will be left with nothing if your apartment complex burns down or if your possessions are stolen, damaged in a flood or destroyed. In fact if you have visitors and someone gets hurt in your home you can even be responsible for their injuries without a renter’s insurance policy. Whether you rent a house, condo, apartment, townhome or even a room, you should seriously consider renter’s insurance to protect your belongings.

Do I need renter’s insurance?

Many renters assume that the value of their items don’t make a policy worth the investment. This is generally not true. Take a few minutes to write down a list of all of your possessions. How much would it cost you to replace your wardrobe? What about your home theater system? Do you have any jewelry or other high price tag items? Even if you only have the bare necessities you might find that it will cost thousands to replace them. Plus you won’t have to worry about being covered in cases of accidental injury of others while they are in your home.

How much will it cost?

You may think that renter’s insurance will be really expensive, but in most cases it is surprisingly affordable. In fact you can probably find a policy for somewhere between $15 and $30 each month. Your exact premium will vary based on your location, the type of coverage you choose, how much coverage you purchase and your deductable. Don’t decide that it isn’t affordable without first getting a quote. You need to have all the information to make an informed decision.

Are there any ways to save?

Of course you are probably wondering if there are any ways to get your renter’s insurance for less. One of the best ways is to group policies. For example if you have an auto insurance policy already you might want to check and see if they offer renters insurance as well. The more policies you group the more you can save. So if you have auto or life insurance policies with companies that offer group coverage you may end up getting a discount.

What should I know before getting a policy?

It is important to know exactly what you are getting into before you make a purchase. Insurance policies can vary a lot and if you don’t know which questions to ask you might end up getting a policy that won’t protect you in some situations. Here are a few important questions to ask before you sign any policies.

  • What is covered?- Find out exactly what is covered in your home as well as what situations you are covered in. Ask questions like, “Am I covered in a flood, fire, burglary, etc?” to make sure that you are covered in every situation.
  • What will it cost?- Find out your monthly or yearly premium inclusive of any fees. Some companies charge a fee if you want to pay monthly or if you cancel your policy before your contract period ends.
  • What will I pay out of pocket should I need to use my coverage? Find out what you will have to spend for your coverage to kick in.
  • Do you offer any discounts?- They will probably say no, but it never hurts to ask.

Make sure that you compare rates and policies and that you choose a reputable company. When shopping for insurance you don’t want to go with a company that you don’t trust. It is always a good idea to check your potential companies through the Better Business Bureau.

While renter’s insurance might not be right for everyone, it is a good thing to have in most situations. It is a relatively affordable way to protect yourself. Think about it- would you be able to replace everything tomorrow without going into debt? Probably not. Renter’s insurance will help you stick to your financial goals should disaster strike.

 

Comments (12)

  • Renter’s insurance falls into line with any other type of insurance. You don’t need it until you need it. The only way I could see not having renter’s insurance is if you don’t have many valuables. I didn’t have renter’s insurance when I was just starting out on my own and pretty much everything I had was hand-me-downs.

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  • Good points to consider! Renter’s insurance is required according to the terms of my lease, so I’d encourage people to check their agreements too.

    Many people mistakenly think their stuff isn’t worth much, but the cost to replace it is really the question. For instance, my three year old computer may not be worth a whole lot if I tried to sell it, but if it was destroyed in a fire you can bet a new one is going to cost a lot! I don’t think many people have a big enough emergency fund to cover the cost of replacing the contents of their home.

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  • In my experience it is cheaper getting quotes online. Some of the top insurance companies offer discounts when ordering online, because it is less work for them. But to be safe you could compare rates online, pick the best offer and try a local agency to see if they can match it or do better: http://www.quotes-center.com/home-insurance-calculator

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  • I think renters insurance is more applicable for people who have a lot of valuables, some people only have the bare minimum especially those renting a room. Besides checking the terms of the insurance is equally worth the time, what’s the point of paying insurance for years but in the end you realize that in case of theft, fire they are not likely to cover even half of the damages!

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  • Insurance is the business of selling protection for your assets. It’s not for everybody though. You have to assess whether or not your assets are material enough to get an insurance. Insurance can cover many things. You also have to choose your insurance company well. Browse their financial statements on the internet or go for the most popular. Your company must have a good financial standing.

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  • I wish I had renters insurance. My bike was stolen last week from my apartment complex. Another thing to consider, if you want to get a pet, a lot of apartment complex’s require you to get renters insurance.

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  • Great article and tips on shopping for rental insurance coverage. I might also add that when you combine your existing auto insurance provider in addition to a renters policy, you will qualify for a multi-policy discount up to 10% with most insurance companies. That savings alone will almost cover the entire monthly premium of a rental policy.

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  • This is a very important post.. renters insurance is so cheap (usually only $10 or $20 a month) and it can protect you from financial devastation in case of a covered event.Great of you to point out how important it is to know your policy well… knowing what is NOT covered is as important as knowing what is covered. Thanks for the post.

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  • Nice reminder for the renters! Another thing to be aware of in coverage is that ‘flood’ insurance won’t necessarily cover water damage due to sump pump or pipe breakage!

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  • Renter’s insurance is a big thing too. You could secure your belongings when you get this kind of insurance.

    but, what if, you are renting a condo or an apartment with a contract that does not allow the renter insurance policy? What would be the best resolution for this kind of issue?

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  • You should determine if the renters insurance you are getting will provide actual cash value coverage or replacement cost coverage. With actual cash value, you can only claim your property’s value at the time of the loss. If your property has depreciated since the time of the original purchase, then you will suffer a permanent loss. With replacement cost coverage, the insurance provider will give you the actual amount needed to replace the item. As can be expected, insurance providing replacement cost coverage has a higher premium.
    Most renters insurance plans have a provision to cover your living expenses in the unfortunate event that your house becomes inhabitable. The reason why your dwelling has become unlivable must be because of a covered loss. In this event, the insurance provider will reimburse you of the additional cost incurred living elsewhere.

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  • As a college kid I don’t think I had renter’s insurance either. I didn’t have much other than clothes and kitchen stuff, and it didn’t occur to me at the time. Now I wouldn’t live without it. A disaster can strike so quickly and it would cost so much to replace every little thing at once. I also make sure that my renter’s insurance covers a temporary place to live should something terrible happen to the place that I am in.

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