Renters Beware: You Need to Buy Insurance Too

Everyone knows a property owner needs an insurance policy, but many renters overlook the fact that they, too, need coverage.

Some think that because the landlord has an umbrella policy, they don’t need additional coverage. Then there are college students who believe their parents’ homeowners insurance covers their apartment.

People somehow don’t think about renters insurance because their home is not a house that they own. They forget that while they may not own the building, they own the contents, and replacing them could be a major expense. Misconceptions about renters insurance can prove expensive when the unexpected happens. A lot of the people in the recent tornadoes didn’t have renters insurance and lost everything.

The number of renters is growing nationwide — it’s up more than 10% between 2004 and 2009, according to Traveler’s Insurance — and in today’s economy, many of them might not be on the lookout for one more bill to add to their budgets. But this is one they can’t afford to ignore, so forget the myths and go for the facts.

Not Buying Insurance for All the Wrong Reasons

In a recent survey by MetLife of people who didn’t have renters insurance, 33% of respondents said they thought renters insurance was too expensive. Not sure where they were looking, or if they were just guessing. But, at $125 to $200 a year for a policy covering up to $25,000 of contents and $300,000 in liability protection, there’s no need to crack your piggy bank, you could spend that much on a couple of nights out on the town.

Nearly one-fourth of folks surveyed said they thought they were covered by the landlord’s policy. Wrong again.

The building is protected, but not your stuff. Furthermore, don’t assume that if your roommate has a policy, that you’re covered too.

Some 20% thought their personal property wasn’t valuable enough to warrant insurance. Do the math. If you had to replace your entire wardrobe, furniture and more — not to mention the cost temporarily moving somewhere else — could you afford to? The costs add up. In fact, insurers say the average person has $20,000 in possessions.

What’s Covered, What’s Not

What’s important is to know what’s covered by your policy and what isn’t. Generally, a basic policy will cover clothing, furniture, computers, electronics and such. You can also get liability protection to protect you if someone is injured in your home.

For items like antiques, expensive jewelry, firearms or special equipment, a separate rider might be necessary. Furthermore, some insurers offer renters policies that cover you for a range of other issues: losses from credit card and check forgery; additional living expenses if you need to stay in a hotel after an incident, and the meals you have to eat out since you can’t cook, among others.

While the circumstances under which you’re covered varies, some examples include fire, lightning, windstorm or hail, freezing of plumbing system, ice, snow or sleet damage, and theft.

Be clear about what’s not covered. For example, jewelry damaged in a fire would likely be covered, but if you simply lost your jewelry, it wouldn’t.

Again, policies vary, but generally, causes of loss that are not covered are intentional loss, pollution, lead exposure, flood, earthquake, and neglect.