According to a 2014 report by ORC International, 95% of homeowners have homeowner's insurance, while only 37% of renters have renters insurance. There is a significant difference between the two, given that both policies pretty much do the same thing. So why do the majority of renters feel they don't have to bother with insurance? Or more importantly - consider why you should have renters insurance.
There are two fundamental reasons why renters avoid taking out renters insurance. Firstly, it has to do with the assumption that the owner of the building already has everything covered within his or her policy. Unfortunately this isn't the case, because the owner is only covered for the building itself and not for what the renter owns. Secondly, renters typically underestimate how much their belongings are worth. Research show that the belongings of an average renter is about $20 000, but it doesn't really seem like it because the items are small and scattered. So they either assume they are covered or they don't believe they have anything worth covering.
Why Renters Insurance Is Important
The most important reason for getting renters insurance has to be for the cover it provides regarding personal possessions. But once again renters prefer to make assumptions, such as it only covers possessions that are stolen from the premises. In truth, this type of insurance covers extensive scenarios. For example damage that is caused by:
- Airplanes and vehicles
- Nature (lightning, volcanic eruptions, snow)
- Smoke and explosions
- Falling objects
These are just some of the situations for which a claim can be made. It's also interesting to note that once these possessions are covered you can take them around the world and still claim if something were to happen. For the most part insurance companies have this clause within their terms and conditions, so it doesn't just cover the items while they are on the property you are currently renting.
Then there is the question of liability when somebody gets injured while on the property you are renting. The responsibility of any medical expenses is not going to fall onto the landlord. Instead, you will be held accountable if that person decides to sue. This is also covered when you have renters insurance.
Some renters insurance policies will even go the extra mile in case you are unable to live in your home for a temporary period. This might be due to one of the above mentioned situations and it's referred to as "additional living expenses". It can cover food and rent when living somewhere else while your home is being restored.
Some Final Thoughts
The cost of renters insurance is going to depend on where you live along with several other factors, but the amount is usually very affordable. It has been estimated at a monthly payment ranging between $100 and $250, which is a very good deal considering your possessions are covered regardless of where they are. Add to this the wide range of situations and possible liability in case someone gets injured, and it only makes sense to get the necessary coverage.