The benefits of auto or homeowners insurance are pretty clear, and most of us wouldn't want to go without – even if coverage wasn't required by law. But renters insurance? It isn't mandatory and, depending on your situation, you might choose to skip it. But it's worth considering.
Do I Really Need It?
Many renters think that they don't own enough to justify buying coverage. But you might be surprised – it adds up quickly. Look at everything you own in the apartment, assess the value, and think of how much it might cost to replace your belongings in case of theft, fire, or other misfortune. Also factor in potential liabilities if a guest is hurt in your unit or you cause damage in a neighboring unit. Remember that your landlord's property insurance policy only protects the building itself. Then decide.
What Does It Cover?
Coverage needs vary by age, location, and the types and level of protection chosen, among other factors. Another important choice: whether reimbursements would be for the item's current cash value or the total cost to replace it.
With either reimbursement option, policies generally cover four areas, up to a chosen dollar limit:
- Your belongings
- Personal liability, if you're legally responsible for someone else's injury or property damage
- Medical payments, if a guest is hurt in an accident in your unit
- Additional living expenses, if you must live elsewhere while damage to your unit is repaired
How Much Does It Cost?
Premiums vary by individual, insurance provider, and location. But a typical policy with a $50,000 property-value limit can range from $100 to $300 annually. The national average is $185, according to the Insurance Information Institute (III). You might be able to lower your premium if you choose a higher deductible or your provider offers discounts for certain circumstances.
What's My Next Step?
III's Renters Insurance Checklist can help you think through your coverage needs. And III's Know Your Stuff on-line tool can help you take inventory. It's free, it's secure, and it's easy to keep up-to-date.
If you decide to go ahead, ask your auto insurance provider whether it also offers renters insurance – it may even give a discount for multiple policies. Or ask your state's insurance bureau to suggest top providers near you.
Learn more about the costs of renting on My Home by Freddie MacSM.
Want to receive our weekly blog round up? Subscribe at the right - and each Friday we'll send you our latest blog posts.
Have a comment or question about this post? Email us to let us know what's on your mind.