Is renter’s insurance worth the cost?

According to the Bureau of Justice Statistics (https://www.bjs.gov), apartment dwellers are 50 percent more likely to be victims of theft than people who own homes. Despite that fact, only “55 percent of U.S. renters, or 61 million people, currently have renter’s insurance policies”, according to a 2022 survey conducted by the folks at SafeHome.org.

Many renters feel insurance simply costs too much. Others either didn’t know that renter’s insurance was available or thought that the value of their personal property was too low to justify purchasing coverage. In a nutshell, their observations could not be more wrong.

Renter’s insurance is inexpensive and definitely worth the money. To drive home the point, an Apartments.com survey showed that the majority of renters who do carry insurance pay an average of just $10 to $15 per month to protect themselves from loss of a place to live, legal liability, theft, fire and lightning damage, weather-related causes (wind, hail, etc.), smoke damage and auto burglary (https://www.apartments.com/blog/the-benefits-of-renters-insurance).

Most tenants underestimate the value of their personal property. It is not uncommon for the cost of a total loss to exceed $10,000 to $20,000, even if a person insures “just the basics.”

Think of it this way: How much would it cost to replace virtually everything you own: clothing, bedding, TVs, stereos, tools, cameras, computers and phones, kitchen and bath items, jewelry, artwork and furniture?  The cost can be staggering. What if someone is injured on your property and you were sued for medical expenses? Again, the cost can easily be in the thousands of dollars.

Renter’s insurance comes in two basic forms: actual cash value (ACV) and replacement cost. ACV coverage only compensates policyholders for the value of their belongings at the time they were damaged or stolen. Replacement cost coverage pays the amount it will actually cost to replace the items. Even though replacement value coverage costs more than ACV protection, the premiums are still well worth considering.

According to the New Mexico Office of Superintendent of Insurance, you should shop a number of companies and  ask the agents some of these questions:

• Are the agent and the insurance company licensed by my state insurance department? For how long?
• How can I find out the claims history of the home before I rent it? The claims history of the home might affect your premium.
• If I submit a claim, how will it affect my premium when I renew the policy?
• How will my credit history affect my premium?
• What does the policy cover? What doesn’t it cover? What are the limits to the coverages?
• How much coverage do I need for my personal property?
• How much liability coverage should I buy?
• Should I buy flood insurance or earthquake coverage? Your renters policy doesn’t cover either.
• What types of water damage are not covered? Is mold damage covered?

If you’re not sure whether purchasing renters insurance is worthwhile in your situation, simply log on to the State of New Mexico Office of the Superintendent of Insurance website at https://www.osi.state.nm.us/pages/bureaus/consumer/resources/renters. There you will find the answers to many of your questions.

Is protection from legal liability and a promise to replace all of your personal property and shield you from lawsuits worth $10 to $15 per month? You do the math.

See you at closing.

Gary Sandler is a full-time Realtor and president of Gary Sandler Inc., Realtors in Las Cruces, New Mexico. He loves to answer questions and can be reached at 575-642-2292 or Gary@GarySandler.comGary@GarySandler.com.