Renters Insurance Buyers Guide
Did you know that more people are renting at any point in the last 50 years? Based on data from the Census Bureau roughly 36.6 percent of households were renting in 2016, this is very close to the 37 percent in 1965. However, only 41 percent of those renting carry renters insurance. This stat means that an astounding number of people are putting their hard earned “stuff” at risk.
Let’s think about it for a second; you had to pay for all of your furnishings, clothes, dishes, computers, etc. How many hours did you spend at your job to make money to buy all these things? Okay, now that you have that number, think about having to do it all over again if your apartment floods because the upstairs neighbor left the water flowing in his tub, or the house you are renting suffers damage from a tornado. You are responsible for your stuff and rebuilding your life can be expensive. Renters insurance, however, is relatively inexpensive.
The Lowdown on Renters Insurance
Renters insurance covers your stuff, things like your furniture, electronics, clothes all the things that make up your home. Perils (or things that cause damage to your belongings) covered include fire, theft, vandalism, plumbing and electrical malfunctions, some damage that is weather-related and other named hazards. A regular renters HO-4 policy covers losses to personal property from perils like:
- Fire or lightning
- Windstorm or hail
- Riot or civil commotion
- Damage caused by aircraft
- Damage caused by vehicles
- Vandalism or malicious mischief
- Volcanic eruption
- Falling objects
- Weight of ice, snow or sleet
- Accidental discharge or overflow of water or steam from sources including household appliances, plumbing, heating, air conditioning or fire-protective sprinkler systems
- Sudden and accidental cracking or breaking of steam or hot water heating systems, air conditioning, or fire-protective sprinkler systems
- Freezing of plumbing, heating, air conditioning, fire-protective sprinkler systems or household appliances
- Sudden and accidental damage from artificially generated electrical current
Loss of use is another common coverage on a renters policy. If your unit becomes unlivable due to a covered peril, you will be given with some money for temporary housing (be sure this is listed explicitly on the policy; if not, there is no coverage). A renter’s insurance policy may also cover the contents of your car or luggage when traveling.
The majority of rental insurance policies have some liability coverage so that you will be personally protected up to a certain amount. Liability coverage protects you in the event you are sued for an injury or other damages incurred at your residence. It pays any court judgments as well as legal expenses, up to the policy limit.
Also if you own a pet, you must disclose it; odds are your premium will be higher as a result.
What Renter’s Insurance does not Cover
You should know in advance that there are quite a few of scenarios that the majority of policies do not automatically cover: backup of sewage into your residence, earthquakes, floods, and other “acts of God.” The good news is that you may add them to your policy for an additional premium if you choose to. For those with any unusually expensive or valuable items like high-end electronic equipment, fine jewelry, musical instruments, or an essential collection of art and antiques, a rider or a separate policy may be required to cover these items. We will discuss these items during the quoting process.
How Much Insurance Do I Need?
When you apply for renter’s insurance, it is a good idea to photograph or take a video everything you own. If you own super expensive items, make sure to write down or photograph any serial numbers that could help support your claim. You can go a step further and create a spreadsheet along with an estimate of each item’s value. Although these measures require some extra effort, you should do them for two compelling reasons.
- Most people think that the total value of the stuff they own is less than it is, this can put you in danger of under-insuring yourself. When you force yourself to sit down and look at the actual value of each item, you will get a more realistic picture of what your belongings are worth. Claim time is not when you want to find out you do not have enough coverage.
- Most insurance companies probably won’t want the inventory or the photographs when you take upfront; your documentation will be essential if you ever need to file a claim. Because you will be better able to prove the value of your possessions, the claim process will be a smoother one. Stash copies of your inventory somewhere other than your residence, such as in a bank safe deposit box, with a close friend or relative, or emailed to yourself as an attachment, or even an inventory app. Being proactive prevents your supporting documents from destruction along with your belongings.
Renters Insurance Rates
Renter’s insurance is relatively inexpensive in relation to homeowners insurance. Rates vary based on where you live and what company you chose, and, of course, on the amount of coverage and other factors, including the amount of the deductible you choose.
Deductibles can range from $500 to as much as $2,000. Just like with homeowners insurance, the higher you go with your deductible, the lower the rate will be.
Another factor will be the type of coverage you choose, replacement value or actual cash value. Actual cash value coverage factors in depreciation (how old the item is) and pays what the item was worth at the time damage or loss occurred. Replacement value pays the cost to replace your items with new ones. On renters insurance, it can be just a tad higher in premium than actual cash value coverage.
Like homeowners insurance, renter’s insurance will give substantial discounts for measures you take to protect your belongings. Insurers like to see things like fire or burglar alarm systems, fire extinguishers, sprinkler systems or even deadbolt locks on outside doors. Many companies offer a discount for bundling your renters and auto insurance as well.
Why Risk It?
Still not convinced you need renters insurance? Just remember this, renters insurance prevents accidents and inconveniences from becoming bank account and budget killers. Your landlord’s insurance protects his or her building only, not your stuff. Speaking of landlord, most will require at least liability insurance to rent from them.
Still skeptical? Take a look around at your neighbors. How many do you think would forget the water was running or leave something on the stove? With only 41 percent of renters carrying insurance, it is very likely they aren’t, meaning that if they cause an accident, say bye bye to your belongings.
Ready to talk about protecting your stuff? We are happy to help!