Many renters, new and experienced, struggle with the idea of renters insurance – and whether it’s worth the money or not. Considering the average renters insurance policy is moderately priced and quite affordable, a better question would be – is it worth the risk of going without it?
If you were to buy a new home, you wouldn’t think twice about getting homeowners insurance. But, interestingly enough, when it comes to renters insurance, you just aren’t sure since the property isn’t yours. After all, renters insurance is designed to protect people who rent their apartment or condo, not to protect a building you don’t own. Well, let’s take this a step further and point out a few important facts that may help you decide if renters insurance makes sense for you.
First of all, renters insurance does not insure the physical structure in which you live. That part is covered under the landlord’s or owner of the property’s insurance. On the other hand, the contents…all of your belongings…are not covered by their insurance. This is where renters insurance comes in. If your rented residence burns, anything you had inside, such as your furniture, appliances, HDTVs, clothes, jewelry and other valuables, would be a total loss. You would not be compensated by the landlord’s insurance if you didn’t have renters insurance. This also applies if your possessions are stolen or damaged by flood waters.
With renters insurance, you would be covered for the value of your possessions in case of smoke or fire, theft or vandalism, lightning, explosion or wind damage. Similar to homeowners insurance, floods and earthquakes are not covered and would require the purchase of additional coverage. Another plus of renters insurance is that it also covers you from liability in the event someone injures themselves in your apartment due to your negligence. In addition, should the damage to your apartment render it temporarily uninhabitable, renters insurance can also cover your living expenses while repairs are made.
When choosing a renters policy, you have two options. You can opt for actual cash value or replacement cost. Actual cash value reimburses you for the estimated current cash value of your possessions minus depreciation. Whereas, a replacement cost policy pays you for the total cost to purchase new items to replace the destroyed or stolen ones. While a replacement cost policy is more expensive, it’s well worth it if you have a great deal of valuables.
Keeping in mind that a renters insurance policy is relatively inexpensive, the final decision of whether or not it’s worth it to you will depend, in part, on the assessed value of all the items you have in your apartment. If the total exceeds $5,000 to $10,000…you may want to consider what it would cost you in today’s dollars to replace everything. When you take into account how much you stand to lose should all of your belongings be destroyed – with no way to get them replaced, especially if money happens to be tight – renters insurance makes more and more sense.
If you’re new to the renters’ world, shop before you buy to be sure you get the best rate on your renters insurance. Why not get a free renters insurance quote today?
Are you a renter and do you have renters insurance? Feel free to share your thoughts in the comments section below.