Do I Need Renters Insurance?

With the economy in a shaky recovery and prices for everything from food to fuel still sky-high in places, many Americans are having to watch their budget closely. For younger people especially — who are almost exclusively renting apartments, often with several roommates — every penny counts and an extra expense for something like renter’s insurance might seem like an outright waste of money.

But insurance isn’t just for homeowners. Renters are every bit in need of insurance as homeowners are, whether they realize it or not. Renters insurance can not only protect possessions but also provide aid in case of disaster. This article will discuss what renters insurance covers (and doesn’t), whether your roommate’s policy can cover you, and how to find the right insurance for your needs.

What Is Renter’s Insurance and What Does it Cover?

Renters insurance is very similar to homeowners insurance in that it protects the personal belongings in your dwelling against covered perils such as fire and burglary and provides liability coverage. Your typical renters’ insurance policy covers these areas:

• Personal property. The primary function of renters insurance is to cover things like furniture, electronics, clothing, and other possessions against damage or theft.
• Liability. Should you or someone else get hurt while inside your rental unit, renters insurance can help cover medical expenses and legal fees (if you’re found responsible for another person’s injury).
• Additional living expenses. If something should happen that renders your rental unit uninhabitable, renters insurance can help with the costs of finding temporary accommodations, such as a hotel or another apartment.

What Doesn’t Renters Insurance Cover?

Now, let’s discuss what renters insurance won’t do for you. Like most dwelling insurance, renters insurance won’t cover things like earthquakes or floods without a separate endorsement. Intentional acts of damage or harm are also not covered by your typical renters’ insurance policy. For your safety and peace of mind, it’s best to review your policy and talk over the finer points with your insurance provider if you have doubts or concerns.

Is Renters Insurance Mandatory?

Unlike auto insurance, renters insurance is not mandated by law. However, you may find that many landlords (as many as 75%, according to SafeHome.org), require renters insurance as part of the lease agreement. This is one of several good reasons to read over your lease agreement carefully to ensure you comply with it and avoid any issues.

Landlord Insurance vs. Renters Insurance

Many tenants operate under the assumption that if their landlord has insurance, that means the tenant is covered, too. Unfortunately, this is not at all the case. While landlord insurance covers the premises and the building itself, they offer no coverage at all for the tenant’s personal belongings. If the worst should occur and your apartment building burns down, your landlord’s insurance will be of no help, and you’ll be on your own.

Am I Covered By My Roommate’s Insurance?

Many renters, especially if they’re on the younger side, pool their resources with roommates to help keep costs down. It may be that your roommate’s renters insurance will cover you in case of disaster — but you shouldn’t just assume that it will. Whether or not you’re covered will depend on the specific policy. To ensure you’re covered where it counts, discuss the policy details with your roommate and see if you need to take out your own policy.

The Cost of Renters Insurance

If you’re already struggling to make ends meet, you might be worried about yet another expense to add to your budget. However, renters insurance isn’t nearly as expensive as you might think. Per numbers from The Zebra’s Ross Martin, your average renters insurance premium costs $233 per year, up to only $19 monthly. That rate might be higher or lower depending on where you live, which insurance company you choose, and so on.

Finding the Right Coverage for You

To know how much insurance coverage you need, inventory all your possessions and tally up their estimated value. This includes things like clothing, furniture, electronics, heirlooms — anything of significant value. Then it’s a good idea to shop around and compare quotes to find the best rate for your budget and — if possible — buy just a little more than you think you need to provide some extra peace of mind.

Despite the low cost and the coverage it typically provides, renters insurance is not as common as it should be. According to statistics, only about 55% of renters have any insurance, which means they could be in a dire financial state in case of burglary, natural disaster, or worse. Renters insurance is worth the price for the liability protection alone.

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