Why You Can’t Afford to Skip Renter’s Insurance

By NICCOLE SCHRECK

Homeowner’s insurance, car insurance, health insurance—for most Americans, these policies are no-brainers, and renter’s insurance should be too.

But according to a recent Rent.com survey, 60 percent of renters do not have a renter’s insurance policy. Younger renters were even less likely to be covered, with 72 percent under the age of 25 without a policy. And given how many first-time renters have little savings, the large number of young and uninsured is alarming.

Even though the 65 and older set were most likely to have insurance (51 percent), that number isn’t as high as you’d expect for a population that’s accumulated a lifetime of assets. More troubling yet are the reasons people have for not purchasing renter's insurance. Here are some of the common misconceptions of the often ignored—and often misunderstood—life saver that is renter’s insurance:

“I can’t afford it.” More than half (60 percent) of the renters without a policy reported that they didn’t think they could afford renter’s insurance before moving in. Prices vary depending on the level of coverage, but according to the National Association of Insurance Commissioners, the average cost of a renter’s insurance policy is about $15 per month; that's certainly less than the day-to-day expenditures a number of people pay for that they don’t need. The average monthly renter's insurance policy is:

• Less than the approximately $80 per month that 50 percent American workers spend on coffee, according to a 2012 study by Accounting Principals.

• Less than the approximately $148 per month two-thirds of American workers spend on buying their lunch instead of packing one and bringing it to work, according to Accounting Principals.

• Equivalent to the cost of two movie tickets per month, at the national average of $7.96 per ticket, according to data from the National Association of Theatre Owners.

“It’s not important.” Of the renters surveyed who did not have coverage, 17 percent said they didn’t think renter’s insurance was important—although that’s far from the truth. It’s easy to think a catastrophe won’t happen to you, but financial disasters related to renter’s insurance may be more common than you would assume. In the United States, a house fire takes place every 90 seconds, and a break-in occurs every 15 seconds. Even if you don’t think your possessions are valuable, imagine the implications of losing and having to replace everything you own: your couch, bed, television, computer and clothes. Those costs add up fast. There’s also a chance other people could be affected. For instance, say you forget to turn your stove off and start a fire in your apartment building. If you’re found to be at fault and don’t have renter’s insurance, you could end up buried in costs far beyond what you owe to replace your personal belongings.

“I don’t need it.” If you’re like the 16 percent of renters surveyed who chose not to purchase renter’s insurance and don’t fully understand what it covers, it can be easy to think that you don’t need it. In fact, many people assume they’re covered by their landlord’s insurance. While your landlord’s insurance covers damage to the building, it doesn't cover your belongings. Individual renter’s insurance generally covers personal items that are lost due to fire, smoke, wind, hail, theft, vandalism and, in some instances, water damage. Some policies also offer liability insurance—covering you if visitors injure themselves in your home.

Most major companies offer renter’s insurance policies, and you may even get a discount by bundling it with your auto insurance policy. Moreover, all of the 18- to 24-year-old renters and those 65 and older who had insurance needed to use it at some point, according to Rent.com.

The bottom line. Renter’s insurance is cheap—and you’ll probably need it.

Niccole Schreck is the Rental Experience Expert for Rent.com, the only free rental site that helps you find an affordable apartment, gives you tips on how to move and then says, "thank you" with a prepaid $100 reward card.

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