The most common response to why people do not have renters insurance is “what do I need it for” and “I’d never use it.” That’s simply untrue. The risk is there, just as it is for homeowners to need their home insurance or car owners to use their car insurance. Everyone would like to think accidents or a home fire would never happen to them, right?
The best way to understand why you need renters insurance and the risks is to think about situations where you may need it. Here are some examples where you would need this coverage:
Renters insurance will help cover the costs of the stolen items. The amount paid out to you will depend on how much coverage you have, your deductible, the type of loss and if you have actual cash value (depreciated) or replacement cost coverage (actual cost to buy new items).
Injury in your apartment
If a someone (even a friend) slips and falls and you have to pay medical payments or even go to court, you have liability insurance on your renters insurance policy. Whether you are liable depends on a couple of factors, but obvious things may fall to the landlord, such as failing to repair a broken step.
Theft from a gym locker or your car
When something is stolen from your car it is your renters insurance policy, not your car insurance, that will cover replacing those. The same goes for items stolen at the gym or from a hotel room.
Fire or smoke damage
Your landlord’s insurance would have to cover the building damage and repairs, but your Renters insurance covers fire and smoke damage after your deductible. Once again how much compensation you receive depends on a couple of factors, including how much coverage you purchased, if you have actual cash value or replacement cost coverage, and your deductible.
Damage to your belongings or furniture
Intentional damage by you would is not covered, but something weather damage would. Weather is the leading cause of property damage. In other words, “this could happen to you.”
If your rental property suffers damage from a wildfire, hail, or tornado, the landlord may or may not repair the home damages, but you would need renters insurance for your personal property. Keep in mind, as is the case for home insurance, there are exceptions, like flood damage and earthquakes.
Cost of staying in a hotel
Renters insurance has “Loss of use” coverage. This covers living expenses if your home is damaged beyond repair. Things like hotel, food, and other living expenses you may incur because of this would be covered. Keep in mind this coverage has limits, as you can assume. Typically it will be based on a percentage of your renters coverage, but can vary by insurance carrier.
Your bathtub overflows, damaging the tenant’s property beneath
In this particular circumstance, you would be at-fault and held liable for the damage and it would be your renters insurance that covers you. If it is an issue with the ceiling or tub that your landlord didn’t fix, the situation may be different.
Don’t let something as affordable as renters insurance turn you from a renter into moving back into your parent’s basement (or your old childhood bedroom if you’re lucky enough that it wasn’t made into a “study” or “craft room”). Call an agent, ask about coverage options and let them give you a quote. It is not only affordable, but could even end up lowering your car insurance.