While 95% of homeowners have homeowners insurance, only 41% of renters have renters insurance. It’s an often overlooked type of insurance, but it’s just about the most affordable protection you can buy.
If you’ve gotten by without it for this long, though, do you really need renters insurance?
Before we answer that question, know that renters insurance covers your possessions from damage and loss. Someone break into your apartment and steal your boombox? It’s covered.
Upstairs neighbor’s pipe bursts, ruining your shag rug? It’s covered.
Fire take out the entire building, burning all of your possessions? Pull out your policy and be ready to make a claim. But only after you digest this CliffsNotes-worthy summary of what renters insurance covers, the types of renters insurance policies, and how to buy renters insurance:
Renters Insurance Covers Your Stuff On The Go
If you’re on the fence about renters insurance, keep in mind that it’s a relatively cheap form of protection. The average annual premium in 2014 was only $190. That’s under $20 a month to protect your possessions. Plus, you can get discounts if you bundle it with the other insurance types you have anyway, like car insurance.
And speaking of your possessions, renters insurance won’t just cover your things while they’re in your apartment. If you keep items in a storage unit, they’re protected there (double check with your insurance provider) on the off chance that they’re stolen or damaged.
(Not that you need to worry about that, though, because MakeSpace’s storage facilities are closed to the public and have 24/7 surveillance. All of MakeSpace’s storage plans also include a $2,000 MakeSpace Guarantee.)
On vacation? Yep, your coverage extends to there, too.
The peace of mind that comes with protecting your stuff — no matter where it is — is one of the most overlooked benefits of renters insurance. If your laptop gets stolen out of a car, or gets a little too cozy with the sidewalk after falling out of your backpack, renters insurance will cover it.
Besides physical items, renters insurance also provides protection in other ways. Basic liability and medical payment coverage is standard in most renters insurance policies, which means you’re not on the hook for legal or medical bills if someone hurts themselves in your apartment.
Everything You Need To Know About Renters Insurance
An actual cash value policy means that your insurer will cover just that — the actual cash value of your items. A replacement cost value policy means that your insurer will cover the cost of repairing or replacing your item at its current price. That’s the difference between your insurer paying out the depreciated cost of your five-year-old laptop, or the full cost of getting a new one.
Because replacement cost value policies tend to pay out more (since they aren’t based on depreciated value), they also tend to cost more than actual cash value policies.
If you’ve had other insurance policies, you know what a deductible is. That’s how much you have to pay before your insurance will kick in. If your policy has a $1,000 deductible, you’ll need to cover $1,000 of repair or replacement costs before your insurance will cover any of it.
Perils are the types of incidents that your renters insurance will cover. On the flip side, exclusions won’t be covered. “All risk” policies cover any peril that isn’t specifically excluded, and “named peril” policies only cover what is explicitly listed in the policy.
As wide-reaching as renters insurance coverage is, it doesn’t cover everything. Flood damage isn’t covered, and neither are earthquakes. Unless you have a personal property endorsement on an item, it won’t be covered if you simply lose it. Some pet damage isn’t covered, and certain dog breeds won’t be covered at all.
Limits on renters insurance policies come in two different forms. Your policy will have an overall limit — say $30,000 worth of total coverage — and individual limits for expensive property. For example, there might be a limit on jewelry, so you can only claim $1,000 for a stolen wedding ring even if it cost $2,500.
Because of these limits, you might consider personal property endorsements. This provides extra protection for specific items or categories (at an additional cost to your premiums). So you’d be able to add a personal property endorsement to that wedding ring to make sure you could cover the entire cost.
Finally, your policy might have additional living expenses coverage. If something happens and you need to spend a few nights in a hotel, your renters insurance would cover this.
How To Buy Renters Insurance
Either way, the first step is creating a home inventory to decide how much coverage you need. There are a few apps that make it easy. Make a note of any valuables that might need extra coverage so you can add endorsements for them. Compare quotes for the coverage you need, buy the most affordable policy, and voià — you’re covered.
Fewer than half of renters have renters insurance coverage. And according to a 2016 Federal Reserve study, 46% of Americans don’t have enough money to cover a $400 emergency. For renters who would have difficulty replacing expensive household items in the event of a calamity, renters insurance is well worth the low cost.
This article was written by PolicyGenius, a digital insurance agency that helps people get the insurance they need and feel good about it. Comparison shop and get the best rates on life, health, disability, renters insurance, and more.