For approximately the cost of a delivered pizza dinner each month, renters insurance can protect your personal belongings and save you from legal or medical expenses associated with an accident in your home. However, many renters believe that taking out the insurance is unnecessary or too expensive.
Here are some common misconceptions about renters insurance, along with tips on how to pick the best policy for you:
Myth #1: "I don't have enough stuff to need insurance coverage."
Since all rental properties are susceptible to a variety of damages, whether it be fire, theft or even a broken kitchen appliance, many experts say there isn't a scenario in which a tenant should go without renters insurance. But it is important to weigh the associated costs, both monetary and sentimental.
A common reason individuals avoid renters insurance is they do not think their belongings are worth the coverage. "Many renters underestimate the value of their possessions and would be surprised by how much it would cost to replace the items they have accumulated," says Emily Lyons, a Liberty Mutual property insurance expert.
If renters think they do not have enough stuff to warrant a renters insurance policy, Keith Rutman, vice president of specialty property lines for Allstate Insurance, suggests they go around their residence, room by room, and take full inventory of their belongings before making a decision. "Most people usually only think of the big-ticket items, like electronics, but if you really think about it, it's so much more in that," he says. "For example, in your kitchen, it's not only the appliances, but the towels, dishes, utensils and food, too. We find that the average renter in a two-bedroom apartment has about $30,000 worth of stuff."
Along with evaluating how much your belongings cost, it's important to consider how much you personally value those items. In some situations, how much you care about your belongs may override cost in your decision to take out a renters insurance policy. "For example, if you just got out of college, are renting a furnished apartment, hardly have any stuff and are not a high-risk person in terms of your lifestyle, you might not care, or need to care, about protecting your belongings," says Robert Hunter, director of insurance for the Consumer Federation of America. "However, if you are renting a penthouse apartment with priceless art on the walls, then you most likely would."
Myth #2: "Since I am a renter, my landlord will cover property damages."
Occasionally, a landlord may partner with an insurance company to offer renters insurance to tenants, but more frequently, the insurance policies that landlords hold for their properties only protect the building itself. "After acquiring a rental housing unit, landlords change their insurance policies from a traditional homeowners policy to a rental policy, and when they do that, it only covers just the structure, not the content or any of the tenants belongings," says James Emory Tungsvik, president of the National Association of Residential Property Managers.
Even if the landlord owns appliances or other items within your rented home, he or she is not responsible for damages they inflict on your personal property. "Say you just bought a few hundred dollars' worth of frozen food and you stuck it in the freezer that the landlord owns, and it breaks down, spoiling all the food," Tungsvik says. "If you wanted coverage for that lost expense, the landlord would not responsible for it. That would be part of renters insurance."
Myth #3: "Renters insurance only covers my personal belongings."
Accidents, such as a flood in your apartment, may damage other tenants' property and can be costly. Renters insurance can protect you from these situations and help cover those unexpected costs. "For example, if your bathtub overflows and water seeps into the apartment below, damaging your neighbor's furniture or rug, your renter's policy will cover the damage up to your liability limits," Lyons says.