Homeowners across America typically understand the significance of insuring one of the costliest purchases they may ever make. Renters, on the other hand, may not understand the importance and benefits of renters insurance.
Some might view renters insurance as just another unnecessary expense each month. However, the added coverage you obtain from both renters content and renters liability insurance can save you a headache in the event of a theft, accident or environmental damage.
What Is Renters Insurance?
To truly understand how valuable renters insurance is, you must first gain an understanding of both renters content insurance and renters liability insurance.
In short, renters content insurance covers the replacement value (or current estimated depreciated value) of items that are stolen, damaged by fire or in some cases, lost.
On the other hand, renters liability insurance protects the renter from paying for an accident that causes loss or damage to an individual or to the property.
Why Is Renters Insurance Important?
Your landlord’s insurance policy will cover the building itself if a disaster were to happen. But it’s not going to cover anything that might be inside.
“Renters may think that their belongings are minimal, and they have enough savings to cover any losses,” said Angi Orbann, vice president of property of personal insurance at Travelers. “But in the event of a loss like a fire, for instance, it can be expensive to buy everything from scratch that you would need to live day-to-day.”
Even if you don’t see the value in protecting your personal belongings, having liability coverage can help save you financially. Let’s assume you forget the water is running in the bathtub. Before you realize it, the water has overflowed and is going through the ceiling to the apartment below. It’s very possible that you’d be held liable and responsible for the damages caused.
But that doesn’t mean renters insurance is needed 100% of the time. Dependents, such as college students, may already be covered under their parent or guardian’s policies. It’s important to check with your agent or insurance representative about your current situation.
How Much Does Renters Insurance Cost?
“The cost of the premium varies depending on the amount of insurance and the type and value of the items a customer is seeking to protect,” Orbann said. “Costs can also vary by state.”
A study by Value Penguin found that the average renter’s insurance cost was $187 per year or just over $15 per month. However, there was quite a bit of variance between states. For example, the average policy in South Dakota is just $118 per year, while it’s $244 in Mississippi.
Orbann went on to say that the Insurance Information Institute uses $15 – $30 when talking about average monthly costs for renters insurance. However, the actual amount a person will pay can fluctuate depending on a number of factors.
Increasing either personal or liability coverage will increase the premiums. You would also pay more if you lived in an area that was high risk for floods or hurricanes. On the flip side, having a security alarm could potentially lower your premiums.
5 Benefits of Renters Insurance
Now that you have a basic understanding of what renters insurance is, let’s dig a little deeper into some of the major benefits.
Protection From Theft
As an avid Air Jordan collector, I made the decision to pay an extra $10 a month for renters content insurance to protect my beloved sneakers and other personal items from potential theft.
While the $10 monthly charge cuts into my Texas de Brazil lunch fund, the $5,000 in coverage I enjoy every month gives me peace of mind that no piece of steak can provide.
Protection From Fire
The fire protection clause on my renter’s contents insurance become very useful when my apartment building caught on fire during my sophomore year of college.
While my personal items were not damaged in the fire, the insurance company paid for my roommate and I to stay at a hotel for a week, and even gave us money for food until our apartment was treated for smoke damage and repairs.
Protection From Damages You Cause
If you cause a fire in your rental that spreads to your neighbor’s rental, you may be responsible for the damages they incur unless you have renters liability insurance.
In short, renters liability insurance compares to full coverage car insurance as renters liability insurance protects you from most of the damages that you may cause.
According to the National Association of Insurance Commissioners, an insurance policy that includes both renters content insurance and renters liability insurance will cost you $15 – $30 extra each month.
Protection From Visitors’ Injuries
If you have renters liability insurance and a guest falls and gets injured, your policy may cover the cost of the medical and legal bills.
In this case, renters liability insurance gives renters added protection from potential financial disasters that may otherwise become life-changing scenarios for your finances.
Protection From Damages You Inadvertently Cause
Renters liability insurance also covers you from damages you may inadvertently cause.
Here is an example of property damage liability coverage according to the Progressive Insurance website:
“You swerve to miss a deer and accidentally hit your neighbor’s car, which is parked on the side of the street.
If you have selected a split limit for Liability insurance, the Property Damage coverage portion would pay to repair or replace your neighbor’s damaged car, up to your selected limit of $10,000. Since the car repairs amount to $500, your insurance would cover the full amount of damage.”
Although you may not be a homeowner, renters insurance provides you with many protections that may be beneficial in the future or in the event of an emergency.
Getting the Best Coverage for You
Once you’ve decided everything your renters insurance policy should include, it’s time to shop around. Get a quote from multiple insurance companies and compare the coverage amounts and the cost. As soon as you find a company that can protect the full value of your belongings and covers your financial assets from liability, it’ll be time to sign up for coverage.
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