Is Renter’s Insurance Worth It?

As a tenant renting a home, you may be operating under the assumption that your landlord's dwelling insurance covers your personal possessions as well as his/her interests. Many renters are under this false assumption.

The fact is, if something happens to the home you're renting, whether it be fire damage, theft, storm damage, etc., without renter's insurance your personal possessions have absolutely no insurance protection.

The Importance of Renter's Insurance

According to a poll conducted for the Insurance Information Institute, renter's insurance is significantly under-utilized in the U.S., although statistics show it's recently becoming more popular. According to the poll, approximately 95% of homeowners in the country have homeowner's insurance, while only about 41% of renters have renter's insurance. This is a sizable uptick since 2011, when those having renter's insurance was only 29%. Renters made up approximately 37% of all American households in 2014, according to the Census Bureau.

A renter's policy is similar to a homeowner's policy, with the exception of coverage relating to the actual structure, including fixtures, plumbing, heating systems and any appliances not owned by the tenant.

Specific benefits of a renter's policy include:

• Coverage for personal possessions against damage/loss from a long list of perils including fire, theft, smoke, vandalism, windstorm, explosion, water and more.
• Liability protection from lawsuits stemming from bodily injury or property damage caused by you or your family members. This includes medical coverage in case a visitor becomes injured while in your home.
• Additional living expenses to pay hotel bills, restaurant meal bills and other expenses above and beyond your normal daily expenses as a result of your home being temporarily uninhabitable because of a covered peril.

Why It's Important

It's natural to consider your personal possessions and their protection as the major factor covered by tenant's insurance. When you start adding up the value of everything you own that's kept in your home you'll probably be surprised at the total. This includes clothing, furniture, electronics, books, artwork, appliances, kitchen utensils, bathroom and bedroom linens and more.

But, perhaps even more important is the liability coverage your policy provides. If someone is injured in your home, or a fire starts in your apartment and ends up damaging every other apartment in your complex, imagine the cost of a liability lawsuit! The average cost of renter's insurance ($188 annually) is a small price to pay for all the protection provided.