Renters insurance is a type of insurance that covers the cost of replacing your property in case it’s lost or damaged. If you’re not sure whether you need a policy, read on to find out what renters insurance myths might be doing more harm than good.
The what does renters insurance cover is a question that many people ask when they are thinking about purchasing renter’s insurance. However, there are some myths that have been circulating the internet and may actually hurt you in the long run.
Years ago, when we had a number of acquaintances in downtown Baltimore, they’d have their vehicles stolen into on a regular basis.
It became so terrible for one of my friends that she left her vehicle open with a note indicating that it was unlocked to prospective thieves (and empty). It was less expensive than constantly repairing damaged windows.
Before you get the wrong idea, this isn’t an article against Baltimore or cities in general. Baltimore is a fantastic city with a long and illustrious history and a distinct personality.
But, like with any large group of people, there will be crime. And this kind of crime occurs all around the world. We’re close to an area with million-dollar rowhomes (which astounds me!) Individuals in a Facebook group complain about people breaking into vehicles every few months.
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These are crimes of convenience. Individuals drive around a neighborhood looking for valuables in vehicle windows and breaking in if they find anything worth stealing. No one is breaking into houses or stealing vehicles; they are just attempting to open doors and take items.
We all thought it was covered by car insurance when it occurred for the first time in our group of friends. It turns out that your homeowner’s or renter’s insurance covers the contents of the car. Auto insurance only pays for physical damage to the vehicle, such as a shattered glass.
Unfortunately, many of us, including myself, did not have renter’s insurance. Some of us did not believe we need it. To be quite honest, I had no idea it existed.
It is, though. You’ll need it if you’re a tenant.
You should be aware of the following five misconceptions regarding renter’s insurance:
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1. It’s difficult.
Renter’s insurance is similar to homeowner’s insurance, except it does not cover the construction of the house (the dwelling). Its owner (your landlord) is responsible for this, which is one of the reasons why homeowner’s and landlord insurance is less costly.
There are three main components to renter’s insurance:
- Your personal goods and belongings are covered by property insurance in the event of damage or loss.
- Liability insurance protects you if someone is injured on your property, depending on the circumstances and who is at blame (it’s either your insurance or the landlord’s).
- If your existing home is unusable, temporary/additional living costs compensate you for alternate living accommodations. If anything goes wrong with the rental and you can’t live there, your insurance will cover the cost of a hotel stay.
You’ll have a deductible and exclusions, just like any other insurance policy.
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2. It is costly.
It isn’t prohibitively costly.
According to the National Association of Insurance Commissioners, most renter’s insurance rates are between $15 and $30 per month. Lemonade, a company that provides renter’s and homeowner’s insurance, claims that some individuals may obtain coverage for as little as $5 per month.
In other words, renter’s insurance is very inexpensive, and you must have a compelling reason to not have it. If it cost a hundred bucks a month, I might understand. Even $50 a month would suffice. Any budget would be shattered by it. However, with prices ranging from $15 to $30, or as little as $5, skipping it makes no sense.
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3. You’ll never have to use it
If you’re fortunate, that is!
You’ll never use it 99.9% of the time, just like many other insurances. If you’re fortunate, you may be covered for the rest of your life, but that’s what insurance is for. Insurance is meant to protect you from the worst-case scenario.
I’ve been a homeowner for almost a decade, but we’ve never filed a claim until this past winter. But it was a monster (burst pipe) of a claim that paid us five figures to cover our butts.
When you live alone, you have more control over a lot of the dangers. You can’t do it when you live with other people (roommates) or in a building with other people (an apartment complex). You can’t double-check that your neighbors didn’t leave the building after putting anything in the oven. You have no idea how old your building’s water pipes are or when one may burst. And you have no idea whether someone above turned on a space heater before going to work.
That’s all stuff you can’t control, no matter how cautious you are, so the chances of anything going wrong increase.
And, since you’re probably not interested in accident and crime statistics (I wasn’t either until I wrote this), you may be surprised to find that the risk was already very high.
The United States Fire Administration keeps data on this, although the number of home fires has consistently hovered between 360,000 and 390,000 each year (2003–2016). The overall lost amount is always between $7 and $9 billion. The causes are much more terrifying. Only 4% are deliberate, while the vast majority are the consequence of cooking (50 percent ).
If fire statistics aren’t enough to frighten you, how about crime statistics? The FBI maintains comprehensive crime statistics, and you can download spreadsheets that will keep you awake at night, regardless of where you live.
I won’t give you the figures, but you can check them out for yourself.
Depositphotos is the source of this image.
4. It’s in your roommate’s/possession. landlord’s
Your landlord is covered by landlord insurance, which includes both property and liability coverage. The house, additional buildings, and personal items needed to serve the rental, such as a lawnmower, are all covered by property insurance. It does not cover your belongings. Responsibility insurance protects them from liability if the landlord is at fault, such as neglecting to maintain the property. It does not cover your legal responsibility.
Your roommate’s renter’s insurance may or may not cover you if you share a room. Then there’s the matter of deductibles, who pays what, and other annoyances. How do you divide the deductible if you both lose everything you own in a fire? What if your possessions are more valuable? Those are the kinds of things you need to answer right now, and it may be simpler to simply obtain your own insurance.
Depositphotos is the source of this image.
5. If you don’t have much things, you don’t need it.
If you have little of worth, renter’s insurance may not be necessary. If you conduct an inventory of your belongings, though, it won’t take long for the total to mount up.
Do you have access to a computer? Smartphone or television? Jewelry? Appliances? Furniture?
When you add it all up, you’ll be astonished. Would you be able to come up with that amount to replace your things if anything occurred, even if it isn’t a large sum of money? It may make a significant hole in your emergency savings or totally wipe it out.
If you can save a lot of money on insurance premiums, self-insurance may be a smart option. Renter’s insurance may be as little as $5 per month, so doing it yourself won’t save you any money.
Depositphotos is the source of this image.
What is the best place to obtain renter’s insurance?
Check with whatever insurance provider you’re currently dealing with since it’s so low across the board.
Lemonade and Policygenius are two businesses I suggest looking with if you don’t have any other insurance, such as car insurance.
You may obtain a quotation from either to see which is less expensive, but neither will lead you astray.
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This story was syndicated by MediaFeed.org and first published on WalletHacks.com.
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Jim Wang
For nearly fifteen years, im Wang has been writing about personal finance. He is the founder of Wallet Hacks, a personal finance site where he discusses his financial and life ideas and methods. He is not a certified financial expert and does not have any letters after his name, but he was formerly a software engineer and applies that technical eye to his personal money management. It is because of this outsider’s viewpoint that he is able to comprehend and explain complex financial topics in simple English. He and his beautiful wife and two children now reside in Maryland.
The my apartment flooded and i don’t have renters insurance is a myth that many people believe. However, this could actually hurt you if you’re not careful.
Frequently Asked Questions
What are the risks of renters insurance?
Renters insurance is a type of insurance that covers the cost of replacing or repairing personal property that is damaged or destroyed by fire, theft, or natural disaster. It typically covers your possessions in the event you are not at home when they are damaged.
Why do you think it is a good idea to purchase renters insurance?
It is a good idea to purchase renters insurance because it will protect you from financial loss in the event that your personal property were to be damaged or destroyed by a third party.
Why would someone want to have renters insurance if their building owner has insurance?
Renters insurance is a type of insurance that covers the cost of living should you have to move out of your apartment due to an unforeseen event. For example, if your building was damaged in a fire, you would be covered by renters insurance.
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