Since most homeowners are also mortgage holders, they are required to have home insurance. However, most renters are not required to purchase renter's insurance according to the terms of a lease. They face many of the same risks as homeowners. Although renters do not have to pay for the actual structure that is rented, they are responsible for covering their personal belongings that they bring into the structure. Most renters do not purchase insurance because they feel that it is too expensive. Average policies range between $15 and $30 per month.
In comparison with the cost of replacing expensive belongings, the monthly premium is a good deal. This is especially true since renters have no control over the actions of other renters who may be careless. Fires destroy hundreds of apartment complexes every year. Some renters do not purchase coverage because they own very few valuables. However, insurers encourage renters to tally up the value of even their small-ticket items. Dishes, furniture, clothing and other belongings often total well into the thousands even for renters who do not have expensive possessions. A basic policy will cover the cost of replacing necessities.
One of the biggest misconceptions about insurance is that the landlord's policy will also cover the renter's belongings. This is not true. The landlord's policy only covers the building and certain features like plumbing fixtures, pipes, wiring and other things that a renter will leave behind when moving out.
How Much Renter's Insurance Is Needed?
The best way to determine how much coverage to choose is to talk to an agent who will collect information about belongings. An agent can suggest how much coverage to buy based on the value of current possessions. An agent will also be glad to explain what certain terms mean. These are some additional issues to consider:
- Does the insurance plan affect roommates?
- Does the insurance plan cover all existing hazards?
- Is any additional coverage needed?
- How much liability coverage does the plan include?
Renter's Insurance Discount
Some insurance companies offer discounts if there are fire extinguishers, burglar alarms, sprinkler systems or other safety features on the rental property. Also, some insurers may offer discounts if a policyholder has other types of insurance with the carrier. Ask about bundling discounts.
Some areas are more prone to flooding or earthquakes. Damages from such disasters are not usually covered under a standard renter's policy. Ask an agent about extra coverage when renting in a high-risk area.