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While most homes or apartments you rent are going to require you to have some form of renters insurance in case of an emergency or accident; this does not mean you should skimp on the choices you make. Having coverage is great, but if you don’t have the right amount of protection; you could end up wasting money each month or losing personal items with no reimbursement whatsoever. Below are a few things to think about when purchasing renters insurance for the first time or updating your coverage.
Know What You Already Have
Many landlords are going to automatically have some sort of coverage on your home but that typically is only going to cover the building in case of fire or any other form of damage that will affect them directly. Oftentimes, this is not going to include the items that you bring into your new home, so before assuming you are covered, make sure to ask and see documentation. You work hard for the money you earn so make sure to give it the respect it deserves; the respect you deserve.
Be Careful when Shopping Around
Whenever looking for renters insurance, or any form of insurance for that matter, it is crucial that you take the time to check out various companies to get the best pricing, coverage, etc that you need. Do not only focus on businesses that you hear about on TV or the radio because a lot of times there are better options out there for you to choose from. Checking online and asking people you trust are just two of the many ways you can go about finding the right coverage for your family. A lot of the time, companies (such as Allstate, for example) will actually work with you and allow you to combine preexisting policies with new ones in order to get a discount.
Different Types of Coverage to Think About
If you are new to the insurance world or don’t feel you were properly educated on the subject in the past, here are a few different types of coverage to think about. This should give you a much better idea of what you are looking for. Every company is going to have unique titles for their types of coverage but here are some of the basics and what they each cover.
Protect Your Personal Items
Think of everything you own in your home: your television, the couch, that nice surround sound system you just purchased. Without coverage, if disaster were to strike, you could potentially lose them and receive zero cash to help you replace them. There is something called ‘off-premise’ coverage which is going to cover items not only when they are within your property but also when they leave the area, such as the laptop inside your car that goes along for the ride to and from work each day.
Get Reimbursed for Expenses
Many companies have coverage that will help you pay for increases in daily expenses if something were to happen to your home and you were forced to move out, as long as the incident is covered within your policy; such as a fire or natural disaster.
Liability Coverage
Liability coverage is great to have because it covers the expenses that occur when someone is injured at your home and sues you afterwards. If you’ve ever been to court before, you can probably relate to just how expensive lawyers, attorneys and all of those legal fees can be. It adds up right before your eyes and without the proper coverage; this would be all coming out of pocket.
Keep Your Guests Protected
Let’s say your best friend comes over to hang out for the holiday weekend and they trip and fall. If there are medical expenses surrounding the incident, having the right coverage is important because your insurance company may just pay for everything surrounding the incident so your friend doesn’t have to.
Fight against Identity Theft
Many of us go through life each day as though nothing is going to happen to us, saying things to ourselves such as, ‘nothing has ever been stolen, so why would that happen now?’ It’s almost as if we think we are immune to such tragedy but it’s impossible to know what tomorrow brings. Being protected against identity theft means you will be able to get back on your feet much quicker and avoid trying to pay for the legal process on your own. Identity theft happens more often than we’d like to think (about 15 million people are affected in a single year in the United States alone) and who has thousands upon thousands of dollars to hand over at the drop of a hat? Having renters insurance that protects us from identify theft is a crucial part of protecting you and everyone else in your family.
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George Smith-Davies works in the finance sector and has a lot of experience regarding financial matters. He says you must have a look at all the aspects of an insurance before buying it. You can also connect with him on google+ and stay updated.
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When we had renter’s insurance, it was only $8 per month! That was a long time ago though =)
Holly@ClubThrifty recently posted..My Dog Pablo: The Freeloading Genius
It is inexpensive and well worth it.
It’s a lot cheaper in the US than in Canada. Up here, people often cite US averages when arguing in favour of renter’s insurance, but they’re homeowners and remain unaware of how truly expensive it is. I’m talking $30+ a month. When you own very little of value, the only indemnification really worth the ridiculous amounts they charge up here is liability (don’t invite people into your apartment lol).
And in Canada, our legal system is incredibly different from the States, particularly litigious ones like California (which seems to be the one people talk about most when criticizing US civil justice). Our legal system is loser pays, it’s much harder to hire a lawyer on contingency (up until a few years ago it wasn’t even allowed), punitive damages here are limited, pain+suffering is almost never awarded, you can get costs for lost wages and medical bills. A plaintiff isn’t going to get a million bucks just cause he fell on a porch or was libeled. This makes our outrageously high insurance costs even more stupid.
Joe recently posted..Atheist Personal Finance?
Interesting points Joe. If you owned quick a bit, then $30 a month would be reasonable. If you owned very little, then it might not be worth it. Our legal system here is a joke. You can get sued for someone getting hurt inside your home when they broke in to steal stuff. It never makes any sense and that is why we have problems with people getting sued.
I like the concept of “loser pays” I wish we would have a system like that in the U.S. You could make it more interesting by making the losing attorney pick it all up, I bet the number of lawsuits filed would drop dramatically!
Jose recently posted..Investing For Financial Independence – Part Two – Stocks, Bonds and Mutual Funds
I also like this idea. This would really cut down on frivolous lawsuits in the US.
When we were renting a couple of years ago, we did not have insurance for this. Luckily nothing happened, but I wish we did have it!
You are one of the lucky ones. You can control what happens in your rental, but you never know what your neighbor is doing and there is where insurance can help out.
Comparison sites make it very easy to compare prices but unfortunately you don’t get to read all the details of the different contracts and it can lead to costly mistakes.
That is a good point Pauline.
This type of insurance is so important, yet many renters don’t get it for the same reason they’re renting in the first place: cash is tight. People were often surprised when I’d call an insurance agent for them to request a quote…and found out that it was a laughably small premium.
AverageJoe recently posted..How to Cut Your 2012 Tax Bill Today
yeah, I went without it when I was a renter, but I had no idea it even existed. It is not often talked about, but it is so cheap.
It was unbelievable how inexpensive renter’s insurance was. I carried it every year that I rented, and while I never needed it, I’m glad that I had the protection!
Andy @ WorkSaveLive recently posted..Why I Chose The Debt Avalanche Method To Pay My Debts
When you have it, nothing happens. It’s when you don’t is where the issue lies.
I didn’t have renter’s insurance the first few years I rented because I didn’t think I needed it and because I thought it would be cost prohibitive. When I found out how little the monthly cost was I signed up right away.
KK @ Student Debt Survivor recently posted..Reformed Extreme Couponer
Good to hear KK. Such a small amount of money for a lot of piece of mind.
I had rental insurance and it paid for itself a million times over when we had a hot water pipe burst doing thousands worth of damage! So important!
Catherine recently posted..Saving To Rebuild Our Emergency Fund
Glad you were able to recover from it. Rental insurance is so often forgotten, but you prove that it is well worth it.
One thing we never skimp on is insurance for anything. For the home we are renting now we have coverage for everything, including flood insurance and expenses should we suddenly not be able to live here.
Tackling Our Debt recently posted..It’s Raining Money $1,000 Cash Giveaway Event!
Nice job Sicorra. Flood insurance is another one that is often forgotten, but necessary in some areas depending on where you live.
So I guess I have been lucky in my ability to avoid misfortune when I was renting. I had quite a few drunken parties out in the deck with more than 30 people and we all survived. In hindsight I was really setting myself up for a problem if someone got hurt, even if it wasn’t my fault! Luckily when you buy a place they make you get insurance which also covers some liability so I’m covered not through my foresight but my banks
I am sure we all did some stupid things when renting. Large parties were common place when I rented years ago. Never thought about liability coverage. Oops!
The liability coverage is one of the most downplayed yet important aspect of it. I just posted an article on protecting your assets that talks about this. One key thing to be aware of with renters insurance, not all policies include liability so you have to do your homework and ask the right questions when shopping for a policy.
Jose recently posted..Do You Have An Asset Protection Strategy In Place?
So true. You have to ask the right questions with any policy no matter what it is for.
There are few people often forget to ask the right questions during the buying-interview process upon getting a policy however, writing down the important questions could be a little help such as the coverage duration etc.