Due to the low interest rates on mortgages, many people have once again added buying a home to their list of goals. But, it is still a decision many people might find unreasonable because of their economic standings. For this reason (and also various others), perhaps renting out a home might present a better option. And while renting a home is a great way to help you save money, there are certain areas where a majority of renters are wrongly cutting the corners. One of these areas is that of renters insurance. Many renters, approximately a 2/3 according to Allstate, do not pay for renter’s insurance. Depending on your location, home insurance can cost you up to a $1,000 – the scenario, however, is nowhere near the one for renters insurance; the average cost of renters insurance is about $12-$15 a month for $30,000 of property coverage and $100,000 of liability coverage. Now that you know that renters insurance is extremely cheap, check out the list of reasons you should have renters insurance – to understand its importance and benefits.
1. The Protection Under Landlord’s Insurance
Many people opt out on purchasing renters insurance because of the misconception that their property is protected under their landlord’s premium. This is only the case if such a contract was signed upon. Otherwise, your landlord’s premium only covers the damages done to the actual property and not the items that you own; this means that the walls, roofs, windows, etc., will be covered but not your laptop, TV, etc. – which are covered under renters insurance.
2. Protection from Disasters
Damages caused by fire, explosions, smoke, wind and/or snowstorms, lightning, electrical mishaps, and certain types of water damages will be covered in standard renters insurance. A lot of times people assume that they are immune to damages in such situations but when a storm like Sandy comes around, this perception becomes significantly altered. Electrical surges are a fairly common occurrence and often damage expensive equipment like computers and TVs that can be easily protected under the standard renter’s insurance policy.
3. Protection from Burglary and Vandalism
Aside from the some natural disasters, you will also be protected is situations where someone steals or breaks your insured property. Many of us have been in situations when this has happened only to be left face the consequence at its full extent of misery. Unfortunately, renters are more prone to these scenarios also; according to the U.S. Department of Justice, rented property is 79% more likely to face burglary than owned property therefore having renters insurance puts you at an advantage.
4. Cost of living while the house is under repair
Many are familiar with the harsh conditions that can prompt residents into vacating their home for a certain period of time; damages caused by fire for example. For many, crashing at a friends or a relative’s house is an unlikely scenario leaving hotels/motels as the only alternative. This of course is an expensive situation. But, those with renters insurance will find this to be a less burdensome process than those without it; from hotel bills to meals, renters insurance can cover all of your out of pocket living expenses while your rental house is being fixed.
5. Personal Liability
Renters insurance also protects you in instances where somebody else gets injured in your apartment in general and/or by the fault of yours (or by someone included in your plan). Not only will your provider pick up the tab for the legal fees, they will also cover your guests/visitors medical charges, as well. The limit of this coverage depends on your liability premium but as much as $100,000 is considered average. It should be kept in mind that the liability offered by most providers does not cover your or anybody included in your plan’s medical charges.
6. Protection beyond your Property
Renters insurance also protects you when you are directly responsible for breaking/damaging somebody else’s property. For example, if you accidently break a friend’s laptop, it is more than likely that this friend will expect you to make up for your fault by replacing his/her item; fortunately, renters insurance will pay! Renters insurance will also protect if you caused damages outside of your home – say a neighbor’s window for example.
Concerns to keep in mind:
1. The “Act of God” clause
While damage to property caused directly by natural occurrences like rain, wind, and snowstorms will be protected under the renters insurance, most providers do not cover drastic events like earthquakes, tornados, and floods; this depends on what the provider determines as “Act of God” (the clause makes no exception for atheists). Depending on your need for such protection – say you live in an area that is prone to severe earthquakes or tornados – you can always add the provisions in your contract to be protected for additional costs.
2. The blacklist on man’s best friend
One of the perks of having renters insurance is to cover the liability in case your dog/pet attacks somebody on or off your property; because it will be covered. However, some insurance providers have blacklisted more known aggressive breeds such as Pitbulls and Dobermans so make sure you disclose this information at the time of signing.
3. High Value Items
It is more than likely that your renters insurance premium will not cover extremely high priced items such as jewelry, specially designed computers, and exotic furniture. Insurance providers put a limit on how much they would want to spend on item in particular category. For example, say you have a policy that protects you up to $30,000 in property damage and you lose a ring worth $8,000, your policy is most likely only going to pay around $3,000-4,000 (a very high number actually) towards it. However, you can separately add such high value items to your policy for additional costs.
4. Not an alternative for small/home business owners
Buying a renter’s insurance (for its cheap premiums) for the purpose of insuring your business related material is not the way to go. Renters insurance will not pay more than $3,000 for business related equipment and if you have numerous computers, scanners, etc. then it is best you choose a policy that is more suitable for your inventory’s protection.
5. Cash Value or the Replacement Value
When you are in the market for renters insurance, you will find some premiums that cover cash values of your insured items and some that cover the replacement value; you want the one that gives you the replacement value of your items. Depending on how the age of your item, it may have lost a significant value and getting only the cash value for it when it’s damaged will keep you from getting more money. This will especially come handy when your furniture ages and loses its value.
For the most part, you are only benefiting from having a renters insurance and for the price it is offered at, it simply makes sense to have one. Every provider has a different policy so do extensive research on not only what is covered, but also what is not; certain plumbing/water system related issues are covered and certain ones aren’t so it is best to know in advance. Lastly, we would love to hear some stories where having renters insurance was helpful and also the times where they weren’t; share your experiences with a comment below.