Nearly half of renters are uninsured for fire, natural disaster and burglary, according to the Insurance Information Institute.
Why do so many people take this unnecessary risk? Some may think that their landlord’s insurance will cover any claims, or they think that only houses are broken into — and not apartments.
But the fact is that more apartments are broken into than homes, and apartments also burn. Worse yet, if a fire starts in one unit it may affect nearby apartments, as well.
But if you’re still on the fence, you should consider the following:
Landlord’s insurance won’t cover your belongings
While your landlord’s insurance policies cover the building and any unattached property they have stored there, that coverage does not extend to a tenant’s belongings.
If you don’t have insurance and your things are stolen or destroyed by a fire or a storm, you’ll have to replace them yourself. Additionally, you’ll be footing the bill for any temporary living expenses you may rack up if your apartment is uninhabitable for a period of time.
Most people have thousands of dollars of belongings and, if a fire rages through their apartment, it’s all gone.
To account for this gap, some landlords require their tenants to secure renter’s insurance.
And there’s an added bonus with renter’s insurance, in that it comes with liability protection against lawsuits by visitors who are injured when in your apartment.
What’s right for you?
Depending on the amount of coverage you purchase, premiums can be as low as a few hundred dollars a year for up to $100,000 in coverage for liability and $40,000 to cover your property.
Understanding most insurance products does take a little time, but it’s always easier with the help of a professional insurance agent like us. We can walk you through the process of how to decide what type of policy is right for you, and determine if you need policy add-ons such as floaters to cover valuables above the coverage limits of a standard policy available to you (if, for example, you have an expensive collection of jewelry).
You will also have to decide whether you want your policy to cover the actual cost or replacement cost of any items that are damaged, destroyed or stolen.
Actual value vs. replacement value
If you have expensive items like electronics that are subject to depreciation, you should consider replacement cost coverage. With this type of policy, you would be reimbursed for the current cost of buying a new equivalent item.
This way, if you spent $2,000 on a computer three years ago, you would receive a check from the insurance company that would enable you to buy a new one.
However, if you had an “actual value” policy, the computer would be valued not at what you paid for it originally or what it would cost to replace it, but at its actual value as a used item. So a three-year-old computer would be covered for its initial cost, minus depreciation.
As a result of these differences, replacement cost coverage is more expensive.
It’s up to you to decide which type of coverage, actual value or replacement cost, best fits your needs and budget.
We can provide you with quotes from a number of insurers, and may even be able to get you a discount if you bundle your car insurance with your renter’s policy.