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Insurance Articles
Reasons You Need Renters Insurance
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There are two big myths about renters insurance. One is that it’s too expensive, and the
other is that it’s not needed. Renting an apartment without insurance is a pretty big gamble
considering that without it, you face the cost of replacing your personal belongings after an
event such as fire or theft. What’s more, you could face the prospect of defending yourself
in a lawsuit because of some accident for which you might be held legally responsible,
whether it happened in your residence or elsewhere. In many cases, for less than a couple
hundred dollars a year you can protect your valuables (like furniture and clothes) from loss
by fire, theft, wind and water damage or other covered hazards.
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Living in Denial
But many renters still don’t believe they need such insurance. A survey conducted by
Cambridge Reports, Inc. for the Insurance Information Institute found that fewer than three
out of every 10 renters purchase renters insurance. Many renters mistakenly believe
their landlord’s insurance will cover their own belongings. In fact, it would be extremely rare for a
landlord’s policy to extend to tenants’ property. To determine how much insurance coverage
you’ll need, take a complete inventory of your personal items. An insurance agent can help
with this by estimating the total value of your property.
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Types of Insurance
You’ll also need to decide whether to opt for depreciated or limited replacement cost
coverage. Depreciated coverage is the cost to repair or replace your belongings minus
depreciation. Let’s say you bought a quality sofa with an expected useful life of 10 years. If
it’s now five years old and would cost about $1,000 to replace, you could expect to receive
about $500 (less deductible) if your sofa was destroyed by fire. You would pay slightly more
for limited replacement cost coverage, but you could expect to receive $1,000 for your sofa
minus your deductible. You should also keep in mind that insurance coverage for some
types of personal property is limited in terms of dollars. Renters insurance also gives you
personal legal liability coverage and medical payments to others who are accidentally
injured while in your home or apartment or elsewhere if the injuries are caused by your
actions. And, if you are forced to live elsewhere because of damage to your residence due
to a covered loss,renters insurance covers additional living expenses.
Remember, you may not own the building in which you live, but you still need to have
insurance to protect your property in the case of fire, theft or other hazards.
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