Home Sweet Home: Do I Need Renters Insurance?

When to get Renters Insurance for Your Place

It’s one of the most misunderstood insurance products on the market. If you live in an apartment or have a child renting an apartment at college, renters insurance is a must.

Renters insurance protects you from losses caused by theft, natural disasters or a lawsuit.

Yet many renters don’t have such insurance. Data from a 2013 Insurance Information Institute poll revealed that only 35 percent of renters have insurance, while 96 percent of homeowners do.

Many renters mistakenly think they are covered by their landlord’s insurance, but a landlord’s policy doesn’t cover a renter’s personal possessions or liability. It only protects the landlord against structural damage to the property.

Without renters insurance:
If someone is injured in your apartment or your pet bites someone and you are sued, your landlord’s insurance won’t cover the costs. Renters insurance would provide liability protection to cover your legal costs and also pay the costs if you are found liable. There are limits on liability insurance, so call us for details.

Those who have experienced a theft understand the value of renters insurance. For example, without renters insurance if you are robbed, you’ll have to pay out of your own pocket to replace everything, including your flat-screen TV, computer and iPad.

Compare that to the average cost of renters insurance in Ohio, about $179 a year, according to the Ohio Insurance Institute (OII). For less than $15 a month, renters insurance is worth it.

But renters often have a false sense of security, thinking they are less likely to be burglarized. The opposite is true. In a June 2013 report, the U.S. Bureau of Justice Statistics said 18.3 percent of 1,000 households that owned properties were burglarized in 2011, as compared to 32.7 percent of 1,000 households that rented properties.

What else is covered?
Renters insurance also protects personal possessions against damage caused by “perils,” such as fire, lightning, smoke, vandalism, electrical surges, windstorms, hail, water damage from utilities or appliances and more. So if your water tank floods the place, your damaged possessions would be covered.

Still, many renters take a gamble, thinking their possessions aren’t that valuable. OII points out that most renters have at least $20,000-worth of possessions. Again, weigh the value of paying $179 a year for insurance versus the cost to replace those items.

Most renters policies also have additional living expenses (ALE) coverage that pays for temporary housing if the place you are renting is not habitable due to a disaster. Policies differ in terms of limits and the amount of time coverage lasts.

The fine print
There are exceptions that renters insurance will not cover, such as damages covered by floods or earthquakes. You can get extra coverage if those possibilities apply to you.  And there are caps on items like jewelry.

Parents sending a child off to college should note that most homeowners policies limit the amount of insurance for a child not living at home to 10 percent of the total coverage for personal possessions if the child lives in a dorm. If living off campus, the homeowners policy may exclude all personal property.

Renters insurance prices vary based on whether you are covered for actual cash value coverage (replacing the items based on a depreciated value over time) or replacement cost coverage (which covers the cost to replace the item). While both coverages have deductibles, replacement cost insurance is more expensive. The higher the deductible, the less the insurance will cost.

Our advice is to review your lease (some landlords have rental coverage requirements), take stock of what you own and call us for help. We’ll look into discounts and explain coverage details to make sure you’re protected.

August 10th, 2016 by Hubbard Insurance Agency