We examine the pros and cons of renters insurance to answer the questions “what is renters insurance,” “should I get it,” and “is it worth it?”
The Cost of Renters Insurance
Generally renters insurance is inexpensive costing about $150 – $300 or so a year or $15 – $30 a month. For that relatively low premium your valuables will be protected in a number of situations from fire to theft and liability will be covered as well. If you have expensive valuables covered or want to change other terms of a renters contract you can typically add “riders” which increase the premium and coverage of an insurance plan.
What Does Renters Insurance Cover?
Renters insurance covers two things it covers your possessions up to an amount and liability to an amount. This means that it will cover the cost of stolen or damaged valuables and/or will cover medical or legal charges related to other people. Typically the dollar amount of goods is covered at a replacement or actual-value up to a specific dollar amount after a deductible is paid and this will be lower than the liability coverage which will cover the costs of medical needs and legal fees.
Renters insurance can have a number of different stipulations as to what is excluded, what the deductible will be, how much it will cover, and whether it covers actual or replacement value. All of these things can typically be changed with “riders” and can affect premium prices.
You can choose to get just liability coverage or just contents coverage depending upon your needs.
How Much Does Renters Insurance Cover?
Renters insurance will typically cover somewhere between $20,000 – $50,000 of contents and $1,000,000 or more in liability. Typically there is a limit per item of anywhere from $1,500 – $5,000, although this limit can be raised with riders.
Actual Cash Value Versus Replacement Coverage
Actual cash value is the deprecated value of an asset and is typically cheaper, replacement value is the market price of a comparable item and is typically more expensive and is included as a rider.
Should I Get Renter’s Insurance?
We suggest getting renters insurance if you are a renter and have a lot of valuable assets and or couldn’t sustain the price of losing the contents of your apartment. If say you run your company out of your apartment you may want to insure at least your contents, if that is a personal training business then you would want lability as well. If you have a low value apartment, but have other assets outside of your apartment you may want to consider lability or an umbrella policy that extended to basic lability at the apartment.
FACT: According to a 2006 poll by the Insurance Research Council only 43% of renters in 2006 had insurance, compared with 96% of homeowners.