The Breakdown on Renters Insurance

According to the Insurance Information Institute, 95% of the people who are homeowners have homeowners’ insurance. In contrast, only about 41% of renters have renters insurance. One of the reasons why there is such a difference in these figures is because lenders often make it a requirement that the property they are financing should have renters insurance. However, there is no such mandate for rented properties.

What is Renters’ Insurance?

Renters Insurance, also known as Tenants Insurance, is an insurance policy that gives you some of the benefits of homeowners’ insurance. So, should you actually take out a renters’ insurance policy? Here are some reasons you should contemplate to help you make that decision.

How much are your belongings worth?

According to Allstate, the average tenant has about $30,000 worth of possessions. God forbid something bad happened where you live – a fire, theft, etc., then you probably wouldn’t be able to replace everything you lost all at once. Therefore, it’s a good idea to assess how much your belongings are worth. You can even use a home inventory app to help you with your calculations. Additionally, having a digital list of all your belongings would help if you were to file an insurance claim.

What exactly will be covered in renters insurance?

This kind of insurance provides Liability Insurance and protects the renter’s property from dangers such as theft, fires and vandalism. It will also pay for costs if the place you are renting becomes uninhabitable. Your landlord’s insurance will cover damage to the building but not damage to your personal belongings. So say a tree fell on the roof, then your landlord’s insurance would cover the roof repair. But the damage cause to your belongings as a result of the tree falling through the roof would not be covered by your landlord’s insurance. Renters insurance would cover that damage.

Why would you need to carry liability insurance?

If someone injures themselves at your place, then you are liable for taking care of that person’s expenses. Since renters insurance carries liability insurance also, it means that if anyone were to get injured in your house or apartment, you would be covered.

What is the alternative to renters insurance?

There is none. Which means that you need to be prepared to pay for your losses if something were to happen. Some people have their emergency fund which they can use to replace or repair their stuff. The challenge is that if there were a real emergency where you lost all your belongings in a fire or your apartment was burglarized, then chances are you would not have enough money to replace all that you lost. Most of the time, people don’t believe that anything bad could happen to them, so they feel taking out such an insurance policy would be a waste of money. Well, a basic renters’ insurance policy will cost you about 50 cents a day. And having one means that at least some of your losses would be covered if something were to happen to your belongings.