What Is Renters Insurance?
If you currently rent the apartment, home or condo you live in: listen up, this article is for you. As a renter, you may be exposed to the risk of liability losses and physical damage to every possession you own. Renters insurance, in my opinion, is the most undersold insurance available.
So what is renters insurance anyways, and do I need it?
Basically, a renter’s insurance policy addresses many of the same exposures a homeowners policy would cover, other than insurance for the actual structure in which you reside. I suspect the main reason your agent doesn’t make very much money selling it because the premium is so low. That’s good news for us though. It’s cheap. I have seen policies for as low as $13.00 per month. That’s not a lot to pay to protect yourself from being sued for a slip-and-fall or losing every possession you own in a fire.
When it comes to liability, there is a 99.9% chance you signed a hold harmless agreement when you signed your lease. That means you are accepting responsibility for any potential liability claims that occur on you property, and that you hold the owner of the property harmless for any claims. In simple terms, the property owner is off the hook if someone gets hurt in your unit, sues, and wins a judgment for damages. Additionally, and probably quite a bit more likely, everything you own is not covered in the event of a loss.
That’s right, there is no insurance for any possession you have if you don’t carry renters insurance. The flat screen, your bed, and the IKEA furniture you worked so hard to build are at risk 24 hours a day. For example, if there were a fire in your unit and everything you own is destroyed, you’d be out of luck. The individual who owns the building does not carry insurance for the renter’s personal possessions. They only carry insurance on the dwelling, or physical building structure and things attached to it. Ask yourself, why would the landlord want to pay extra for insurance on your items?
So what can you do? Well, you can get your hands on renters insurance by calling your independent insurance agent or by contacting a direct writer. Either can sell you a policy or get you in touch with someone who can. Your policy will carry limits in the following format: 10/25 or 20/25.
The first number, the 10 or the 20 in the examples above, represents how much coverage you have for your personal possessions in case they are destroyed by a fire. Seems a little high? Grab a pen and write down every item you own and assign a replacement cost value to it, as though you were going to buy an identical item tomorrow. I know people who have $10,000 in DVD’s alone.
The second number, or the 25 in both examples above, represents the liability limits you will have. This can come in handy for any number of reasons. Perhaps someone slips and falls when entering your doorway during a rainstorm. Just like in the shopping mall, the person who occupies the property has a duty to keep it safe. If you were sued as a result to the example above, you would have $25,000 in coverage, saving you from having to pay damages to the other party out of your own pocket.
Bottom line: Renters insurance is dirt-cheap. The last thing you need is to lose everything you own in a fire, or have your salary garnished to pay for someone’s broken leg as a result of a slip and fall in your apartment. As with any type of insurance, I suggest you buy as much as you can afford. It is best to rank insurance near the very top of “absolute necessity” items, rather than an afterthought.