Renters Insurance: Cheap and Necessary
If you're reading this blog post and you're in your 20s, chances are you're writing a rent check each month. And like most renters, you probably don't have any insurance to protect your valuables in case of a fire or robbery. In fact, nearly two-thirds of college-age renters don't have renters insurance, according to Allstate Insurance. Beyond college, more than half of renters fail to have any property protection.
Why? Most think renters insurance is too pricey, a misconception. On average, a plan costs roughly $16 a month - about as much as you may have spent on brunch this weekend.
But if you have stuff you need to protect - anything from a laptop to your furniture, clothes or jewelry - then you need renters insurance. Your landlord may have an insurance policy of his own, but it won't replace your prized possessions: In the event of a blaze or burglary, a landlord's or management company's policy usually covers damage to the overall building, not the individual apartment units and the property inside. Also, if you have a roommate who has insurance that doesn't mean you're off the hook from getting your own. Roommates need individual policies.
Here's some more background on renters insurance:
What It Protects
Renters insurance generally covers the loss of personal property in cases of theft, vandalism, storm damage and fires, but not (usually) in cases of weather-related floods and natural disasters. The insurance typically comes with "liability coverage," which helps in cases where a tenant would be legally liable if a visitor gets hurt - for example, if someone slips and falls in your home and decides to later sue you.
What It Costs
Renters insurance costs less than $200 a year on average, although the amount varies depending on where you live, your deductible and how much coverage you'll need. You can compare quotes on sites like insure.com and esurance.com.
Two Coverage Options
You can get one of two types of coverage:
- Actual cash value coverage pays the depreciated value of any lost or damaged assets.
- Replacement cost coverage covers the cost of replacing the items.
You'll usually pay about 10% more for "replacement cost" coverage, according to the Insurance Information Institute.
Available Discounts
"Multilining," or buying various insurance policies - like renters insurance and car insurance - from one source, can sometimes result in a reduced rate. Some insurers will also offer a discount for having preventive devices in your home like smoke detectors and fire extinguishers.
Photo courtesy: TurkeyChik from Flickr
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