WTF Is Renter’s Insurance And Why Do I Need It?
You might be sick of your parents getting on your case about it, but renters insurance is actually really important. And super affordable.
If you’re a millennial, chances are you’re renting your home. According to Pew Research Center data, a whopping 65 percent of millennials are currently renting, and apparently, the other 35 percent have some superhuman immunity to the allure of avocado toast.
So we're a generation of renters. NBD. Except that it kind of is. Because as it turns out, very few renters are protecting themselves the way that the should. The Insurance Information Institute found that while 95 percent of homeowners have a homeowners insurance policy, only 37 percent of renters have renters insurance.
Which means the vast majority of renters are placing themselves in a very vulnerable situation, fiscally speaking—especially considering renters insurance is actually quite affordable.
"Renter's insurance, similar to auto insurance, should be part of your financial package," says Erin Lowry, author of Broke Millennial: Stop Scraping By and Get Your Financial Life Together. "Home owner's need home insurance, but renter's are not always required by landlord's to purchase renter's insurance."
Even still, studies show that people don’t think renters insurance is worth it or particularly necessary. One of the main reasons people pass, according to US News, is that they don’t think their belongings are worth much. But on average, a two-bedroom apartment contains $30,000 worth of stuff, according to the report. "My policy costs me just over $14 a month for $20,000 to replace personal belongings and $100,000 for each occurrence of liability coverage," says Lowry.
The only way you wouldn’t need renters insurance is if you have the funds to replace everything yourself in the case of an incident (though TBH, if that's the case, you're probably don't need to rent).
For everyone who doesn't have a cool $30,000 hanging around "just in case," there are three main types of renters insurance: personal possessions, liability, and additional living expenses.
The first, personal possessions, covers you if you lose your stuff. "Renter's insurance is not only the ability to protect your own belongings," says Lowry. Liability protects you if someone falls and hurts themselves at a party you’re throwing, or if your dog bites your roommate’s boyfriend. This is major.
Additional living expenses cover your temporary housing if you’re displaced by something like a fire or flood in your building.
Here's the good news: "It's often really affordable," according to Lowry. And we found that rental insurance policies cost an average of $184 a year. That’s just over $15 a month.
So now that you’ve decided to get insurance—you are getting it, right?—we’ve got some tips for what you can do:
First, take inventory of your belongings to figure out how much coverage you need. Reach out to your auto insurance company and ask about renters insurance, because they might offer you an awesome discount package if you bundle the policies.
Then, figure out what's covered under your policy and what isn’t. Some events, like those scary things in your lease called Acts of God, aren’t on regular plans. So if you live in an area prone to earthquakes or mudslides (attention, Angelenos), Cox suggests you ask your insurance about a separate policy for that.
You should also do a bit of research regarding the coverage of your more expensive items. Insurance companies can set limits for certain items—$2,500 for electronics and $1,500 for jewelry, for example. This means that if you have something of major value, you can and should purchase an additional personal items policy. As add-ons to your renters insurance, these are usually only a few dollars a month.
So, rental insurance isn’t actually as complex and stuffy as it seems. It’s relatively affordable, pretty versatile, and really important if you want to protect your stuff. And it gives you one less thing to worry about if you have a tendency to leave your hair iron plugged in.
Words: Eva Grant