Understanding the Importance of Renters’ Insurance
Most homeowners understand the necessity of home insurance to protect their property from loss or damage. If you have a mortgage, you’re typically required to have it. However, if you’re one of the more than 100 million Americans who are renting instead of buying, don’t underestimate the value of renters’ insurance.
With an increasing number of seniors choosing to rent in retirement as a way to avoid the responsibilities of homeownership, it’s more important than ever to understand what renters’ insurance is, what it covers, and when it’s needed.
If your rental home is damaged due to a fire or a break-in, your landlord is responsible for repairing the property itself, but not for fixing or replacing your personal possessions. This is where renters’ insurance becomes essential.
What Does Renters’ Insurance Cover?
Most renters insurance policies cover your personal belongings, including furniture, electronics, and appliances. If your items are destroyed in a disaster, stolen during a break-in, or otherwise damaged by a covered peril, this insurance can provide financial protection.
Particularly valuable items, such as jewelry, artwork, and collectibles, may require additional coverage, known as a rider or a floater. When shopping for a policy, be sure to accurately tally up the value of your belongings and check whether the policy’s limits are sufficient.
You’ll also often have the option to add coverage for additional living expenses or liability. The former covers your costs if you need to move out temporarily while your unit is being repaired. Renters’ liability insurance protects you from being sued for injuries or property damage that occur in your rental unit. For example, if your pet bites someone, your policy could cover medical expenses.
Renters’ insurance may also cover the belongings of your roommate or significant other, provided their name is on the policy. However, many insurance companies will require roommates to have separate policies rather than one for their combined property. Theft by a roommate is generally not covered by renters’ insurance, so it’s wise to choose your roommates carefully.
Limitations of Renters’ Insurance
Renters’ insurance generally won’t cover damage to your personal property caused by natural disasters, such as hurricanes or earthquakes, according to Janet Ruiz, a spokeswoman for the Insurance Information Institute. For such coverage, you’ll need to purchase special policies.
How Much Is Renters’ Insurance?
Although renters’ insurance can save you a significant amount of money, it doesn’t require a large investment. “It’s one of the most affordable products you can get — often as low as $300 a year,” Ruiz says.
Unlike homeowners insurance, which can cost significantly more in some states (such as Florida), renters’ insurance is usually inexpensive regardless of where you live, Ruiz adds.
Tips to Cut the Cost of Renters’ Insurance
There are several strategies to reduce the cost of renters’ insurance. You may be eligible for a discount by purchasing a policy from the same company that insures your car, for instance.
You might also receive a discount if you take steps to make your rental property safer from break-ins, such as installing a security camera, says Dustin Lemick, an industry expert and founder of BriteCo, a jewelry insurance company.
It’s crucial to shop around. You can compare coverage and costs of various renters’ insurance policies at sites like TheZebra.com and Gabi.com.
Additionally, keep an eye on changing premiums. “Insurance companies are notorious for raising rates, and policyholders don’t even know it,” Lemick explains. “Set a reminder in your calendar every eight to 10 months to review your policy and ensure your premiums haven’t increased.”
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