Imagine a worst-case scenario in which your living space has been devastated by a fire, flood or been completely burglarized and vandalized. Adding insult to injury, you don’t have any insurance to cover the loss or to start over.
That’s the all-too-common situation that renters place themselves in by shrugging off the necessity of securing a renters insurance policy. What makes matters even saltier is the fact that you could be adequately protected for less than one dollar a day, or less than the price of a small coffee.
If that reality doesn’t persuade you to get the cost-effective protection you deserve, I hope the following analysis sheds some light on why renters insurance is a must in 2019.
Importance of Renters Insurance in 2019
One common misconception that renters seem to believe is they just don’t have enough at stake to warrant this additional expense. Considering the high cost of today’s Smart televisions, computers and other devices that are targets of theft, renters may want to do a little math on how much it would cost to replace your possessions.
After tallying up your valuables, it may surprise you to know how few renters take steps to protect their investments. Only about 37 percent of renters have coverage compared to a whopping 95 percent of homeowners, according to a 2014 Insurance Information Institute poll.
The number of people renting living space has increased. Today’s Millennials are reportedly renting at a higher rate than other groups, according to reports. The currently tight housing market and rising interest rates are expected to result in more everyday people renting instead of buying.
But the fundamental question renters continue to ask — even in facing potential losses — is, “why do I really need renters insurance?” These are three things I strongly urge renters to consider.
1: Affordable Protection
The average cost of renters insurance continues to trend at less than $20 per month in most states. In some states, coverage can be secured for less than $10. That’s about the cost of a good Netflix subscription and far more enjoyable if you can be reimbursed for a loss.
2: Personal Property Protection
It’s important to understand that most homeowners with a mortgage get coverage because they are required by their lender. The portion of that coverage that covers loss of personal property is generally factored in as a percentage. A renters insurance policy covers similar items such as electronics, furniture, jewelry, clothing, and other valuables. Like homeowners insurance, your coverage would reimburse losses due to things that include the following.
- Smoke Damage
- Lightning Strikes
- Severe Weather Impacts
- Aircraft Crashes
- Civil Riots
- Water Damage and Flooding
Although people often think about losses in terms of burglary and theft, there are a wealth of conditions that can result in substantial or total loses.
3: Liability Coverage
Along with direct financial losses to your personal property, many renters insurance policies also include a liability provision. This coverage is often overlooked by renters who assume any slip and fall, or another injury would be referred to the property owner’s insurance carrier. Unfortunately, we live in a culture where lawyers push to sue everyone and sort out responsibility later.
In the interim, you could at least be on the hook for hefty legal bills in the thousands. For less than $20 per month, standard policies usually offer $100,000 or more in total coverage. Ontario home insurance policies also tend to have a line item specifically for medical bills. Liability insurance amounts to pennies when you consider the possibility of getting embroiled in protracted and expensive civil litigation.
What Makes Renters Insurance Additionally Useful?
Beyond the direct losses renters too often suffer from theft and damage, renters insurance usually includes many of the helpful perks found in homeowner and auto policies.
Consider for a moment that you were in an automobile accident. In all likelihood, your car, truck or SUV will be spending time at the dealer or mechanic undergoing repairs. It may even be a total wreck. Despite the fact that you feel secure knowing the loss will be covered under your policy, how exactly do you get to work, school and important life appointments without a vehicle?
The answer is often a line item in your policy that provides additional coverage for a rental vehicle until your automobile is restored. That often proves to be an invaluable aspect of auto insurance and renters insurance can offer similarly useful benefits.
Often called “disruption” or “relocation” insurance, many renters insurance policies will pay for extended stays at a hotel or motel while your living space is not inhabitable. Policies also offer coverage for relocation in the event your rental space suffers a complete loss. Although many landlords are liable to pay for such out-of-pocket expenses, getting a check from your insurance company and letting them chase the property owners makes your life keenly less stressful.
Calculating A Renters Insurance Policy
Given the incredibly low cost, it’s almost mind-boggling to think that less than half of all renters protect themselves with a policy. The average renters insurance policy runs about the same cost as a decent cell phone charging cable or set of earbuds. Not having a policy seems almost silly when you consider how many of those items you lose or replace each year. That being said, these are the critical factors that can save you even more money on a policy.
- Location: An insurance company calculates premiums based on the risk of loss. People living in urban areas are considered at a higher risk of those living in rural areas, generally speaking. The state you reside in will also impact the premium amount.
- Rental Type: Houses, condos, and duplexes are usually considered at a higher risk of loss than apartment buildings. Expect a lower rate if you live in an apartment complex.
- Credit Score: There’s little doubt that credit history plays a substantial part in our culture. Just as the landlord probably checked yours before signing a lease, the insurance carrier generally rewards good ratings as well.
- Total Coverage: In calculating risk, insurance outfits also factor in the maximum potential payout in a total loss. Lower coverages are generally less expensive ones.
- Deductibles Matter: A deductible is an amount the policyholder is responsible for paying out-of-pocket before the coverage begins. One of the reasons that insurance organizations generally require these policyholder costs is to avoid being flooded with nuisance claims. With that in mind, insurance companies tend to charge even less for policies with higher deductibles. The average renters insurance deductible runs between $500 and $2,000. When opting for a higher deductible, remember that you will be called upon to pay that amount if you suffer a loss.
Contact a Renters Insurance Company Today
If you are renting an apartment, condo, duplex or home, the value of renters insurance far outweighs the nominal cost. Although premiums vary between urban and rural landscapes and even state-to-state, the differences are hardly worth considering not having full protection. I hope this overview of the cost-benefits of renters insurance in 2019 inspires you to get the secure coverage you deserve.