Renters Insurance: Why All Renters Need To Have It

Renters insurance is considerably less expensive than homeowners insurance. Yet a 2006 Insurance Research Council survey revealed that while 96% of people who own their own homes have a homeowners insurance policy, only 43% of those who live in rented homes have a renters insurance policy. Like home owners, renters have personal property worth protecting and with most renters insurance policies only costing between $15 and $30 a month (NAIC.org), renters insurance is one of the greatest values on the insurance market today.

What Is Renters Insurance And What Does It Cover?

There is a common misconception that when renting a place to live, you are covered under your landlord's homeowners insurance policy. This is a fallacy, as most landlords' policies only cover the outside of the building and its infrastructure. But a renter's insurance policy will cover your belongings from theft and damage and destruction from fire, lightning, smoke, windstorm or hail and vandalism while living in a rented complex. In addition, some renters insurance policies provide liability coverage should a guest sustain an injury while in your home or if their property is damaged while on your premises. Some renters insurance policies will even cover your living expenses if you're forced to live elsewhere due to a covered loss.

Do I Really Need Renters Insurance?

A rented property is 79% more likely to get burglarized then an owned property (US Department of Justice). Look around each room of your home and take a mental inventory of your personal belongings. Now imagine if it were all stolen, damaged or destroyed. Could you afford to replace all your furniture, clothing, electronic equipment, CDs and DVDs, etc.? A renters insurance policy can enable you to protect thousands of dollars worth of property for only a few hundred dollars a month. When you factor in the liability coverage included in most policies, renters insurance is a great value, and an investment in peace of mind.

What Kind of Renters Insurance Policies are Offered?

There are two main types of renter's insurance policies you can purchase; actual cash value or replacement cost. An actual cash value policy will reimburse you for any property stolen or damaged after taking into consideration the depreciation of each item. A replacement cost policy will reimburse you the full cash value of the current market price for each item. The replacement cost policy will likely be more expensive to purchase than an actual cash value policy. Renters may also want to consider adding on flood and earthquake coverage to their standard renters insurance policy. Just like homeowners insurance, these features are additional add-ons. You can also purchase identity theft insurance with most renters insurance policies.

How Much Renters Insurance Coverage do You Need?

The amount of renters insurance coverage that you should purchase depends on how much stuff you own. To accurately figure out what coverage amount you need to purchase, you should take an inventory of all your possessions in your rented living quarters. While doing the inventory, make sure you note the purchase price of each item, model numbers, as well as serial numbers.

If you are living in a complex that allows pets, such as large dogs, you should consult your insurance agent to make sure all liabilities are covered. Also, if you are living with a roommate, each one of you needs to get your own renters insurance policy. A roommate's policy won't cover your assets and vice versa.

If you are living in rented home, make sure you protect your assets with a renters insurance policy. For a relatively low monthly payment, you can purchase enough renters insurance coverage to protect all your assets, giving you the peace of mind that your possessions are safe.