Money Talks, So Should You

Is it worth it: Renter’s insurance

Clint Williams
by Clint Williams, Dimespring Contributor

The burst of the housing bubble means there are a lot of former homeowners living in apartments or rental homes. And most of them have a houseful of furniture, electronics, clothing and other valuables vulnerable to burglary, fire or flood.

The issue

Homeowners typically have a mortgage and that means the bank requires them to have homeowners insurance to protect the lender’s collateral. But homeowner’s insurance, in addition to rebuilding a house damaged by fire, also protects the stuff inside the house.

READ: What to ask when renting your first apartment

Renters have no such protection by default.

While most American homeowners have insurance, only 31 percent of renters buy renters insurance, according to a 2012 survey by the Insurance Information Institute. And in many big cities, renters significantly outnumber homeowners. In New York City, for example, 69 percent of households are renters. In Los Angeles, it’s nearly 62 percent.

And, guess what, if somebody steals your flat-screen TV, your landlord isn’t buying you a new one.

Renter’s insurance, like homeowner’s insurance, covers your belongings against losses from fire or smoke, lightning, vandalism, theft and other strokes of bad luck. Renter’s insurance also includes liability coverage and covers your responsibility to other people injured at your home or elsewhere by you, a family member or your pet and pays legal defense costs if you are taken to court.

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The liability coverage is one reason some landlords require you buy renter’s insurance as a condition of the lease.

Renter’s insurance may also pay your hotel bills and other additional living expenses if you are can’t live in your home because of a fire or other covered mishap.

The breakdown

Renter’s insurance is fairly inexpensive. The average renter’s insurance policy costs only $185 per year in 2010, according to the National Association of Insurance Commissioners. Depending on the deductible, liability coverage and other factors you may spend as much as $300 or a so.

The price tag may seem steep, but have you added up how much it would cost to replace all the stuff in your apartment? A web site of the Insurance Information Institute – www.knowyourstuff.org – will guide through a room-by-room inventory of your apartment or rental home. But it’s pretty easy to tick off big ticket items while sitting on your couch ($800) watching a Blu Ray ($150 for the player) on your flat-screen HDTV ($1,200) and updating your Facebook status on your laptop ($750).

READ: Is it better to purchase a home or rent?

The verdict

There are more than 106,000 apartment fires in the United States each year. In 2011, there were an estimated 2.2 million burglaries and 6.1 million thefts, according to the FBI.

Renter’s insurance is a necessary expense to protect you from all sorts of trouble.

 

Clint Williams is an Arizona-based freelancer for DImespring. He has written for the Arizona Republic and the Atlanta Journal-Constitution.