Many people these days have opted to rent their residence rather than purchase a home. Some look at the burden of maintenance and upkeep, while others prefer to not deal with the additional expense of high property taxes, gardeners, and other incidentals that can eat away at their budget.
Whether you rent or own your home, the contents and belongings that fill it are of some value and need to be protected from loss due to fire, theft, or other disasters – as well as covering you from personal liability should a friend or stranger be injured while inside your residence. Unfortunately, bad things can happen.
Required in some states
Maybe you don’t put much value on your furnishings, electronics or clothes, but keep in mind that certain states, such as Texas, require that you purchase renters insurance in order to rent an apartment. Like it or not – this is for your protection and your landlord’s.
If you aren’t required to have insurance, assuming that renters insurance is something you don’t need and would probably never use, is being unrealistic. In fact, the term “renters insurance” encompasses more than a policy that reimburses you in the event of your physical possessions being lost, damaged, destroyed, or stolen within your apartment.
For example, “content insurance”, which is typically included in a renters policy, covers items that you keep in your vehicle. So, if your vehicle is burglarized during the night while it’s parked out front of your apartment, you may be reimbursed for any covered items stolen from it – minus your set deductible.
In addition, renters insurance can also protect you from liability issues should a guest or door-to-door solicitor trip on your “welcome” mat and sustain an injury. Your renters insurance policy’s liability coverage could cover the cost of a potential lawsuit and/or the injured party’s medical bills.
How much renters insurance is enough?
But, how do you know if you have enough renters insurance? Sometimes it can be difficult to determine how much is sufficient. That’s why it’s important to follow a few guidelines to figure out how much you really need.
- Keep track of covered items
It’s your stuff and your responsibility to keep track of what you own so that, in the event of a theft or other covered incident, you can itemize what needs to be replaced. Provide your insurer with a rough financial accounting of the contents of your apartment so he or she can more accurately judge how much coverage you’ll need.
Maintain a detailed review for your own records, including photographs and purchase receipts that can be stored in a safe place – away from your residence.
- Content insurance vs. liability insurance
While it’s a good idea to carry content insurance and liability insurance since your insurer will generally sell them both as part of a comprehensive package, some renters may pass on one or the other. But, this makes little sense when you consider the average cost of a “typical” renters insurance policy. The Independent Insurance Agents & Brokers of America defines a typical policy as $30,000 of property/contents coverage and $100,000 of liability coverage, costing about $145 per year.
Of course, annual rates may be slightly more expensive in higher crime areas or in places where catastrophic weather events, such as tornadoes, hurricanes or devastating brush and forest fires are prone to occur more frequently. Still, paying a little more seems like a bargain to protect $20,000 to $30,000 worth of your stuff.
- Do you own expensive jewelry or collections?
Another consideration to how much renters insurance is enough is whether you own expensive jewelry, paintings, or other valuable items, such as antiques.
Because the “average” renters policy has caps on how much you can be reimbursed should these items be stolen, damaged or destroyed, you should consult your insurer to purchase a “rider” or special endorsement on top of your standard policy. Note: You’ll be expected to provide proof the items actually exist with photos and receipts prior to the policy being issued.
The additional protection will assure you of getting closer to replacement value of your precious possessions – minus any applicable deductibles associated with the “rider” policy.
In the end, once you take everything into account, renters insurance seems like a no-brainer. Deciding how much you actually need depends on how much stuff of value you own, how much liability coverage you choose, where you live, and how much your landlord will require before you sign the lease.