It was a cold December in Minnesota, a few days before the holidays. I was watching the 10 p.m. news from the comfort of my living room. The lead story was about a huge fire that destroyed an apartment complex in a Minneapolis suburb, leaving many people homeless right before the holidays. I saw the panic and devastation of several tenants interviewed. They had lost everything—all their possessions and holiday gifts. Many victims didn't have renters insurance; they were personally responsible for finding and paying for a place to stay and coming up with the finances to rebuild their lives.
If you don't have renters insurance and don't want to end up like the people I saw, let this article be your wake-up call.
renters insurance basics
Renters insurance can protect you against financial losses from damage caused by fire, pipe/water leak damage, and explosions. It also can protect against theft, vandalism, or injury to others that occurs in your unit. Note that floods, earthquakes, tornados, and hurricanes aren't always covered. If you live in an area where these natural disasters are common, you may have to buy an additional policy.
According to the National Association of Insurance Commissioners, Washington D.C., the average cost of renters insurance is $15 to $30 a month. The odds are slim of ever having to use renters insurance, but the risk is huge if something happens and you don't have coverage. Bottom line? It's worth it no matter who you are or how tight your finances are.
The average cost of rental insurance is $15 to $30 a month. Here are some common excuses for not having renters insurance:
- "My landlord already has coverage, so I don't need it." Wrong. Your landlord's insurance policy will cover structural damage to the building, but does nothing for your personal property.
- "I'm just starting out in the world—I don't have anything valuable anyway." Wrong again. Do you have a TV? An iPod? Jewelry? Clothing and shoes? A bike? Computer? Even if your individual items aren't worth that much, it would cost a lot of money to replace everything at once.
getting renters insurance
Follow these steps to get the right coverage:
- Inventory your possessions. Make a list of the item descriptions and values (and keep updating as you buy new things). Keep an electronic copy that's accessible from multiple locations, such as an e-mail account, so you can access it anywhere in case your computer is misplaced or damaged.
If you're just starting out, you'll probably be OK with a basic policy covering up to $10,000. If you have a high-value item, such as a family heirloom or a wedding ring, you might want to take out a rider—additional coverage not offered under the main policy—for that item.
As with any insurance policy, compare rates among companies. Bundling insurance policies also can save money. If you have car insurance, start with the company you have insurance through and see if it offers discounts for customers who purchase multiple policies through the company. After you get that rate, do an Internet search or call directly to compare rates from several companies.
A policy with a higher deductible—the amount you pay before coverage kicks in—will have lower premiums. If you can afford to take the risk of a higher deductible, consider that option and save to cover the deductible in your credit union savings account. Just make sure you're realistic. Are you really going to be able to absorb $2,000 in unplanned expenses when disaster strikes? If not, opt for a lower deductible and higher premiums.
Learn more about renters insurance.
Get renters insurance quotes.
Take inventory of your possessions.
- Check for other discounts. Sometimes companies offer discounts for buildings that have protections like deadbolt locks, fire extinguishers, and burglar alarms. Provide this detail to your insurance agent before receiving a final quote. Also, ask about a lump-sum discount—if you pay for a full year in advance, the overall cost of the policy might be reduced.
Ask for details about what is not covered. The cheapest policy might not be the best. Are there pet restrictions? What type of personal liability incidents does your policy cover? And what doesn't it cover?
Be completely honest; if you qualify for a policy based on deceit you are engaging in insurance fraud, and that will void any coverage you might otherwise be eligible for.
Decide if you want a policy that will cover the cost to replace your items, or the value items were worth at the time they were damaged or stolen. For example—if you buy a flat-screen TV today for $750 and it's stolen two years from now, the value of a two-year-old TV will be much less than $750, while the cost to buy a comparable new TV could be more than $750.
If you have roommates, you'll want to discuss renters insurance with them. It's much less complicated if everyone purchases renters insurance, but if you have stubborn roommates who won't budge, you'll need to make a very detailed list of your possessions.
- See what additional coverage might be included in your policy such as identity fraud protection.
Everyone thinks "it won't happen to me," but those folks who found themselves out in the cold in that Minneapolis suburb know better. Take these simple steps now to protect yourself.