Renter’s Insurance is a vital part of being a tenant, whether your landlord actually requires it or not.
Man, I hate Murphy. Whoever he is, that guy’s Laws have really been the bane of so many people’s lives. Fortunately, that’s why we have the insurance industry: because things go wrong with startling regularity. Unfortunately, there’s a lot of tenants who don’t have renter’s insurance because they don’t understand it.
Let’s fix that.
Your Landlord’s Insurance Doesn’t Cover Your Stuff
Your landlord’s insurance might reimburse you for the loss of your belongings if the landlord’s negligence is what caused the loss — but even that is becoming less and less common these days. In general, if anything happens to a house or apartment you rent, you and you alone are responsible for dealing with the ‘your stuff’ part of the problem. This is why many landlords insist on renter’s insurance as part of their lease contract.
Your Landlord’s Insurance Doesn’t Cover Your Liability
If someone gets hurt on the property you’re renting, it might seem reasonable that the landlord will have to deal with any subsequent lawsuits, because they own the property. (Un?)fortunately, that’s not how the law works. There are areas the landlord agrees to maintain, and areas you agree to maintain (usually, the outdoors and the indoors respectively.) So if someone slips in your kitchen and breaks their hip, that’s on you. If your dog bites the mailman, that’s your liability. If your tub overflows and water drips through the floor onto the lower neighbor’s brand new plasma screen TV, that bill is going to your address. Renter’s insurance is the mechanism by which those liabilities may be covered.
You’d be Amazed at How Much Your Stuff is Worth
You might be thinking, “What, I use about $250 worth of actual durable goods each day? I can replace that out-of-pocket.” But what you’re not thinking about are things like:
- Your wardrobe
- All of your dishes, pots, pans, spices, cookware, flatware, and kitchen appliances
- Your TV, DVR, computer, tablet, video game consoles, and entertainment system
- Your bedroom set
- And so on.
It’s not uncommon for a single person in a one-bedroom apartment to have $12,000 in personal belongings and think nothing of it — but how long would it take you to replace that at your current income?
Avoid ‘Cash Value’ Policies; Pick ‘Replacement Value’ Policies
A renter’s insurance policy that pays out the cash value of all of your stuff if that stuff is destroyed is largely useless, because by definition, you could never sell something you’ve used for the same amount that you would spend to replace that thing. Make sure that the renter’s insurance you get says that it will pay the replacement value, or you won’t get enough back to replace everything you need.
Most Renter’s Insurance is The Same
Other than the cash value vs. replacement value policies, it’s amazing how similar renter’s insurance is across the market. There’s a total of one “base policy”, created by the International Standards Organization a few years ago, that almost every company bases their policies on. You might find a policy that offers higher deductibles for lower premiums or vice versa, for example, but even those variations are based on the same core math as the others. NOTE: not all renter’s policies though cover dog bites, so be careful if you have a dog.
So in the end, simply having renter’s insurance is about as good as it gets — you’re not going to get any incredible benefit by scouring the market and looking for “the best” policy. Don’t get caught waiting for the ‘right’ policy to crop up — get insured, and be glad you did.