What Is Renters Insurance And Why Do I Need It?
By Martin Dasko
Updated on January 28, 2021
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What is renters insurance and Why do I need it?
Have you been looking into renters insurance?
Here's a common scenario: You finally have your place and you have your freedom. The furniture is coming together and the apartment is starting to feel comfortable. You’re excited about planning a housewarming event (when allowed, of course).
There’s just one thing that you still haven’t figured out and it's your renters insurance situation. You’ve likely tossed around the idea of renters insurance and if you even really need it.
I recommend you start your journey with a free renters insurance quote by state.
According to a study done a few years back, 57% of millennials (aged 18-29) don't have renters insurance at all. The folks surveyed mentioned multiple reasons for why they didn't have renters insurance.
Some didn’t have renters insurance because they didn’t know how it works, some renters thought that they were covered by their landlord’s insurance, some thought that they didn’t have enough items to get insurance and some even thought that it would be too expensive to have renters insurance.
Many renters even figured that they lived in a secure enough location to not require renters insurance at all for their situation.
Why Do You Need Renters Insurance (2021 update)?
Since publishing this detailed guide to renter's insurance, I had my own situation arise where I had to deal with property insurance.
"I don't want to freak you out, but the place is flooding with sewage water."
My tenant sent me this text message one October evening. I couldn't believe it. I instantly called the property insurance company and they immediately sent an insurance adjustor to the unit to assess the situation.
The adjustor arrived before me and had already started clearing the area out.
Luckily, my tenant has renter's insurance and everything was handle by the insurance company.
The renter's insurance company paid for a place for the tenant to stay (this includes hotel and meals), replaced all of the personal belongings (everything from the couch to a new tablet), and covered the actual damages that were caused through no fault of the tenant.
Renter's insurance covered every expense and helped handle a situation that otherwise could've been catastrophic financially. Keep on reading to find out more about renter's insurance...
So what’s the deal? Do you really need renters insurance?
Renters insurance is a necessary expense when you move out and live on your own. It doesn’t matter if you just rent one room in a home, rent a place in a safe community or don’t have anything overly expensive. You need renters insurance. This upfront tiny investment can save you thousands of dollars in the future if anything were to happen to your place, to your most valuable possessions, to you, or even to a guest while visiting your place (more on this later).
We’re going to look at what exactly renters insurance is and why you need it...
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What Is Renters Insurance?
What’s renters insurance all about? We often hear about how we need renters insurance, but nobody really explains it to us. This is why we’re going to break down the importance of renters insurance so that you know why you should have it even when you think it really doesn’t apply to you.
The simplest definition that I could find when it comes to what exactly is renters insurance was located on Investopedia:
“Renters insurance is property insurance that provides coverage for a policyholder's belongings, liabilities and possibly living expenses in case of a loss event. Renter's insurance is available to persons renting or subletting a single family home, apartment, duplex, condo, studio, loft or townhome. The policy protects against losses to the tenant's personal property within the rented property. In addition, a renter's insurance policy protects against losses resulting from liability claims, such as injuries occurring on the premises that are not due to a structural problem with the property (in this case, the owner's – not renter's – policy would apply).”
Long story short: Renters insurance is about protecting yourself, your finances, and your possessions.
You’re also protecting yourself in the event that something were to happen to someone on your property. You don’t want to get stuck paying for their potential hefty medical bills (hospital visits, X-Rays, and so on) and any legal fees due to a lawsuit.
A simple cooking fire in your kitchen could also not only damage your place but the units around you.
Your renters insurance would cover your expenses and their expenses.
You would also be covered under your renters insurance policy in terms of your hotel stay and money for meals since you wouldn’t have access to a kitchen.
When you take the time to look at what exactly is renters insurance, you discover that this small investment can save you thousands of dollars and give you a peace of mind.
Here’s another example, you can have your laptop covered even if it gets stolen out of your car or your suitcase when you’re traveling.
Many of us aren’t aware of how much coverage truly comes with renters insurance.
We’re going to look at scenarios that show exactly why you need renters insurance even if you think it doesn’t apply to you.
"The whole process was so simple. Other insurance companies need to step into the current century!"
Why Do I Need Renters Insurance?
“Do I really need Renters Insurance?”
I know that’s what you’re thinking right now despite some of the aforementioned benefits of renters insurance.
You have a laundry list of expenses to deal with already and you don’t feel like spending any more money.
I can totally understand how frustrating it can be to deal with yet another expense.
So let’s answer that original question.
Do you really need renters insurance? Yes.
You definitely need renters insurance and this isn’t something that you can be frugal on.
You have to protect yourself and what you’ve worked hard for. If any of your valuable possessions were to get stolen or damaged, you would have to spend the money to replace everything individually without insurance.
If an electrical issue would fry all of your plugged in devices, you would have to replace everything on your own (from your tablet to your new laptop).
With that being said, you may be confused about renters insurance since you don’t feel that you own all that much stuff to even have to worry about protecting it.
“Do I need renters insurance if I don’t own much?”
I recently had a friend complain to me about how they’re a minimalist and how this was justification for not paying for insurance.
Unfortunately, being a minimalist doesn’t exclude you from needing insurance. Insurance protects more than just your possessions like your laptop and couch.
Renters insurance protects you from things out of your control. Renters insurance provides you with personal liability coverage for events that could happen that would lead to financial turmoil.
According to this story on Forbes:
“Like homeowner’s insurance, renter’s insurance includes liability coverage – so if someone is injured in your home, the cost of their care and of legal proceedings regarding their injury is covered up to your policy’s liability limits, which is typically $100,000.”
You may not be worried about all of your personal belongings but you certainly have to worry about what happens inside your home.
This is one of the scariest thoughts that I’ve ever had. If someone gets injured on your property, it’s on you.
Something as simple as a friend tripping over a rug or cutting their finger while chopping up some onions for dinner, could come back and haunt you with medical bills.
We don’t plan for any of this to happen, but life teaches us all that anything can happen.
If you’re thinking about why to buy renters insurance, please remember that spending a few bucks monthly could save you a lot of money in the future.
The last thing you ever want is to be caught up in a legal battle. The fees will add up and you’re going to be on the hook for thousands of dollars.
Why is renters insurance important even when you don’t own much? Here’s a quick summary:
- You never know what can happen to you or to one of your guests. You don’t want to get sued if something were to happen to a guest while visiting.
- You want to be able to get your stuff back. Imagine having your laptop stolen or having your clothing get damaged. Even if you own a few items, you don’t want to be on the hook for replacing them. The insurance plan will likely be cheaper than having to replace everything.
- You don’t want to be stuck with the bills if something that happened in your unit damaged the units around you.
When does renters insurance apply to you? All of the time.
Now it’s time to look at a few situations that will show why renters insurance is so important due to the future savings.
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Why buy renters insurance to save money in the future?
- You would have to pay to stay in a hotel if your unit were to get damaged. The renters insurance would cover a hotel, meals, and even other possible expenses.
- You can be covered in case someone else has their stuff damaged at your place.
- You can have your items replaced even when you’re not at home. For example, if you have your laptop or clothing stolen on trip, you’ll be protected. This is a benefit of renters insurance that many young people don’t often know about. Off-premise coverage for travelers is important because there’s nothing like having a valuable possession stolen while you’re supposed to be on vacation.
With all of that being said, I understand that your budget can still be an issue. Let’s look at one more scenario when it comes to renters insurance.
Pro Renters Insurance Tip
Renters insurance doesn't just cover the replacement of your belongings, but also protects you if someone gets hurt on your property. Limits usually start at $100,000.
Why is renters insurance important to you when you’re a student?
As a college student, you may not have much or you may think that you’re covered under your parents’ renters insurance policy.
Here’s what you need to know about renters insurance as a college student:
- College students living in a dorm could be covered under their parents’ renters insurance policy if listed as a dependent. College students living in a dorm will only have personal property coverage and it’s usually capped at 10% of their parents’ coverage.
- College students living off-campus will need their own renters insurance policy. You’re not covered and you want protection for yourself along with your possessions.
What To Do Before Buying Renters Insurance...
What do you need to do before you buy renters insurance?
Before you sign up and pay your fees, I want you to look over a few things when it comes to renters insurance.
Here’s what to do before buying renters insurance:
- Take inventory of your possessions. The home inventory assessment is important so that you get enough coverage. What do you own? What’s the value of your possessions? Try to write everything down and take pictures so that you know what to ask for when getting a renters insurance quote. There are apps that can help you keep inventory of your possessions. Once you start adding everything up, you’ll see that you own more than you think.
- Consider what kind of coverage you’re going to need. This is where you have to be brutally realistic with yourself. Do you plan on hosting many events? Do you own expensive possessions? Is your unit older? What kind of community do you live in? How’s the structure of your unit?
- Contact your current insurance provider. Do you have auto or life insurance? You can contact that company to see if they offer some sort of insurance bundle to help you simplify your bills and to save some money.
- Shop around for the best renters insurance quotes. Take some time to find a few quotes until you find the ideal plan for you and your needs. You’re going to want to look around so that you’re happy with the price you pay and the coverage that you receive.
Good luck with finding the ideal renter's insurance policy for your situation. You'll be glad that you invested in insurance.
Renters Insurance Starting at $5/month
No brokers, no paperwork, get a policy in seconds. Zero Hassle, zero paperwork, zero worry. Join now! Starting at $5/month.
It's free to apply!
I like that you said that you must consider shopping for insurance quotes to find an ideal plan for you. This is something that I will share with a friend who is planning to shop for an insurance plan. He mentioned that he wanted to find a policy for his rental property that would fit all his needs without getting problems with his budget. Thanks for sharing this.