Imagine going away for a weekend, only to return home and realize your apartment was burglarized. Your TV, computer, and other electronics are all gone. Your jewelry is too. Some of your furnishings have even been vandalized. Could you afford to replace everything yourself? If you said no, then you need a renters insurance policy
A 2016 Insurance Information Institute poll found that just 41 percent of renters have it.1
And that's out of a whopping 43 million rental households in the United States.2
So if you've been putting off getting renters insurance, read on to find out why you can't afford to go without it anymore. What is Renters Insurance?
Simply put, a renters insurance policy will protect you financially if you lose any of your personal possessions while renting a house or apartment. It covers your items - including clothes, furniture, kitchenware, and more - whether they are stolen or damaged by fire, smoke, lightning, severe storms, vandalism, or water damage not caused by a flood.3
What makes renters insurance different from homeowners insurance is a renters policy protects only your possessions, while homeowners insurance covers both the actual structure and personal belongings inside.4
That means your landlord is responsible for carrying a policy to insure the building where you live, but in most cases that policy won't cover your personal things. Of course, that is what makes renters insurance relatively affordable for you, simply because it doesn't have to cover a structure.
Just how affordable? Probably a lot more than you think. In 2014, the national average for a policy was about $190 annually, or roughly 52 cents per day.1
That's likely less than you pay for a weekly cup of coffee. Rates vary by state and region, and some of the most expensive include Alabama, Arkansas, Georgia, Louisiana, Mississippi, Oklahoma, and Texas.5
Some of these are also in what are considered high-risk markets because they are more prone to natural disasters like hurricanes and tornados. Pro Tip:
If you have car insurance, ask your agent about bundling it with a renters policy. Multi-policy discounts are great ways for you to save, and it could help make a renters insurance policy more affordable.
But what makes renters insurance even more important is that it goes beyond protecting just your material possessions - it also protects you
. For instance, it might pay for your living expenses if you can't stay in your apartment because of a fire or other disaster. And something it does have in common with homeowners insurance is it shields you from liability or negligence. For example, if someone is hurt in your home or you accidentally leave the sink running and it overflows into your neighbor's apartment below, your policy may pay for repairs, medical bills, and other damages. It could even cover your legal costs if they sue you for the damages (up to the limit of your policy). And while you may not think liability insurance will ever come in handy, consider this: injuries requiring medical attention happen more at home than they do in public, at work, and in motor vehicle crashes combined
The Right Policy for You
There are several things to consider when you're researching renters insurance policies, including how much your deductible will be and whether to choose a policy that provides "actual cash value" or "replacement cost" in case you must file a claim. Just like your car insurance, the deductible is the amount you're responsible for paying before your insurance coverage kicks in. Choosing a higher deductible can help reduce the cost of your overall premium. And if you choose a policy that provides actual cash value, you'll be reimbursed for 100 percent of the price to replace your property (up to your policy limit). A policy that determines value on replacement cost, on the other hand, takes depreciation of the items into consideration, which usually makes the premiums on these types of policies a little less expensive. The bottom line is almost any kind of renters policy is better than no policy at all. When you rent a home or apartment, renters insurance will safeguard you from losing everything in the event of damage or theft. And you'll be surprised how easy it is to get affordable coverage.