Over the past several years, two of my good friends experienced apartment fires that ruined parts of their homes (although thankfully did not injure either of them). Maybe that's part of the reason why I think of renters insurance as more of a necessity than a luxury. For a relatively low amount—my renters insurance in Washington, D.C., costs around $100 a year—you can protect yourself financially from potential disasters striking your home.
Most college-age adults, however, don't bother to get renters insurance. According to a new study from Allstate Insurance, two in three say they have no insurance protection whatsoever. At the same time, about half said their belongings are worth more than $10,000 and the vast majority said that they could only afford to replace some of those items if they had to.
Allstate, not surprisingly, wants to encourage young people to insure themselves. They point out that many people are willing to pay a couple hundred dollars a month on clothes, but aren't willing to shell out anything to protect themselves from the risk of theft, fire, and other catastrophes. “It’s a shame because renters insurance is one of the smartest investments people in this situation can make and so few take advantage of it," says Julie Parsons, a vice president at Allstate.
Renters, in fact, are more at risk than homeowners. The Bureau of Justice Statistics reports that renters are 50 percent more likely to experience theft than those who own their homes.
So, what's stopping renters from taking out insurance? Allstate's survey suggests it has a lot to do with confusion over how much it costs. One in three survey respondents thought the insurance would cost much more—as much as 15 times more—than it actually does. To get a sense of how much it would really cost them, consumers can call insurance companies or visit their Web sites to get price quotes. The cost typically depends on region, the value of what's being insured, and other factors such as whether the building has a doorman.
Do you have renters insurance and like it? Or do you avoid it for a specific reason? Please share your perspective below.
Note to readers: The next Alpha Consumer book club selection is Sarah Strohmeyer's The Penny Pincher's Club, a novel filled with personal finance tips. Please E-mail me at email@example.com if you have questions for the author.