Why You Should Have Renters Insurance

by Little House on 22 June 2011 12 comments
Photo: Infrogmation

I've been a renter my entire adult life and have been fortunate not to have any reason to make a claim on my renters insurance. So why do I still carry it? Because accidents do happen, unfortunately. Though I've been lucky in the past, this doesn't dissuade me from wanting to make sure I'm covered in case of a mishap in the future. I've heard too many stories about renters who happened to be the victims of natural disasters or crimes and found out after the fact that their landlords' insurance didn't cover their personal property. And that was if their landlords actually had insurance.

While I haven't experienced any crime, disaster, or accident serious enough to warrant using my insurance, I am glad to have it for several reasons. (See also: When You Should and Shouldn't Rent)

In the event that your landlord doesn't carry any

Now it might be the law in some states that a homeowner must carry insurance, but that doesn't mean that every homeowner does.

Take my last rental for instance. I was renting a run down house in a very middle class neighborhood. My landlord owned a few rental properties and was somewhat lazy. Not only did he not repair his properties, allowing them to fall into a state of decrepitude, it turned out he didn't even bother to pay his homeowners insurance bill. I only happened upon this information through another one of his tenants who had suffered property loss through an electrical fire. Had that tenant had renters insurance, most of his personal property would have been replaced without the headache of a legal scuffle with the landlord. At that moment, I was ever so glad I had renters insurance.

In case of a natural disaster

Every state in the U.S. is prone to some sort of natural catastrophe, whether it's hurricanes, tornadoes or earthquakes. I just happen to live in Southern California, land of the rumbling ground. I haven't experienced an earthquake large enough to damage property since 1994, yet there's a good chance another will occur in my lifetime. Few insurance companies offer earthquake insurance these days, but my carrier offers it with a high deductible. Even with the large deductible it's worth it since I'll never know when "the big one" might hit.

Because it can cover accidents that happen within your home

Have you ever had a guest fall down your staircase, trip over your cat, or burn themselves on your stove? Your landlord's homeowners insurance will cover accidents that happen around the external perimeter of your rental property, but it may or may not cover accidents that happen within the interior of the property. Having renters insurance with a personal liability rider will cover these types of accidents, leaving you on good terms with your accident-prone friends.

The cost of renters insurance is minimal

Prices are based on the stated value of your personal belongings. For instance, the lower the replacement cost of your personal belongings, the less the monthly payment. When I first purchased my renters insurance policy years ago, my monthly payment was under $20 a month. As I've accumulated valuable furniture and appliances over the years, I've bumped up my coverage but am still paying less than $500 for the year, and that's with earthquake coverage.

The wise saying "it's better to be safe than sorry" most definitely applies when it comes to renters insurance.

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Guest's picture

Renters insurance is quite cheap, and if you are worried about losing your posessions, it's a great thing to have.

For me, I currently rent a fully furnished home. The most valuable thing we own is our car, and after that it's my wife's wedding ring. Everything else is $100 or less. If any of it was destroyed, I wouldn't really care that much! It's not worth having renters insurance for me.

Little House's picture

I guess that's one way to save money; not own anything valuable! ;) However, someday when you own more expensive items if you're still renting, it's a good thing to have.

Guest's picture
Nate

We were one of those who thought nothing would happen to us and about 5 or 6 years ago, we had something happen to the home we were renting. We we lost was more valuable than what it would have cost for renters insurance. This is good advice.

Little House's picture

Thanks for sharing your story. I think a lot of renters think nothing will happen, but when it does not having insurance will cost more.

Guest's picture
Guest

I wish I knew about renters insurance a few weeks ago. We had a huge storm and a tree fell into my house. Since the house was condemed I've been staying with friends and my land lord said hes hoping it will be fixed by the end of July. I wish there was something I could do in the meantime because at the end of this month it's looking like I'll be staying in a hotel. I purchased renters insurance June 1 (the storm was on May 27) after hearing about it from the firepeople who were at my house the night of the accident.

Guest's picture

Yeah renters insurance is very cheap... but Im pretty sure when you rent an apartment that you dont have any other choice but to get renters insurance...Out of the 5 apartments and 1 house I have rented in my 20's, ALL of them required renters insurance to move in.

Guest's picture

I tell people to get it all the time, but I still haven't completed the paperwork. I have no excuse! We are moving within the next month - I'll use that as a chance to create a proper inventory and get coverage.

Guest's picture

While I think a lot people underestimate renter's insurance, I think
there is a significant amount of people who never considered it
because a) they've never even thought about it, or b) it's not
available to them. I know for me, I don't own a home, so the thought
of insurance for my property in a rental never entered my brain.
That's what HOMEOWNERS insurance is for, right? Fortunately I could
fix that with a simple phone call to my bank. But, for millions of
Americans who are unbanked and/or underinsured, there isn't a plethora
of inexpensive one-off renter's insurance options. I work for a
prepaid card company that's working on a product to fill this void in
the market; I think it's important that as homeownership rates drop,
there are more rental insurance options for the increasing amount of
renters.

Guest's picture
Joan

I own a condo, and I have always had condo insurance. As mentioned above, it costs me about $22 a month and is well worth it. I also had renter's insurance when I was married and my ex and I rented apartments before we bought a house. The two (condo and renter's insurance) are similar - you just never know when something can happen.

Guest's picture
Malomonster

My husband and I got renters insurance because we were scared after a friend's renting experience. My friend was renting a house, and there was a (thankfully) small fire in the roof of the house due to old, faulty wiring. She lost nothing, but the thought of how bad the situation could have been spurred us to protect ourselves.

Guest's picture
Guest

It seems per the above comments that some people only think renters insurance is a good thing to have if you have lots of personal property. While this is partially true, rental insurance also provides liability coverages for damages if someone is hurt on your property. If you have a dog as an example and he/she bites someone guess who's paying for that if you don't have any coverage!

Guest's picture
Guest

I learnt this lesson a funny way. I had renters insurance and was considering to scratch it when something happened to property and I had a lot lost / damaged. Insurance payment was $7 500 which did not only cover everything I lost but provided me with enough money to purchase rental insurance for many years to come. After this incident I am insurance junky - whenever there is a possibility to insure something I'm for it!