More than a third of Americans rent their homes, with a significant percentage of U.S. cities having a majority of renters, according to a 2019 study by RentCafe. This proportion reflects a significant increase over the last century, with home ownership seeming like a more distant prospect. Even those who eventually buy their own homes may spend a longer time renting before saving up the down payment they need for purchasing.
During these extended rentals, the question of renters insurance crops up. For many young professionals, it’s a “take it or leave it” kind of proposition, not getting much thought. But as we get older, have families, and accumulate valuable keepsakes, the question of renters insurance takes on a new dimension. That’s when it becomes more important to understand what renters insurance actually covers. Does it truly offer significant benefits to us as renters? Here’s what you’ll want to know.
Is Renters Insurance Meant for Landlords?
This kind of insurance is truly intended for renters. While landlords have their homeowners insurance on the property, they rely on the rental agreement to protect them from liability for damage to the renter’s property. As the renter, meanwhile, you’re on the hook for any damages caused to the building (and it doesn’t take much damage to take a big chunk out of your security deposit), and you have sole responsibility for all of your property.
While you may have some potential legal recourse in the event of issues like faulty equipment or plumbing, it’s not a good idea to rely on the mandatory protections that a rental agreement may offer. These agreements are designed with a landlord’s interests in mind, so renters can benefit from another form of protection in case there’s something that causes significant damage to their rental homes. They can turn to renters insurance to get some peace of mind.
Benefits of Having Renters Insurance
Renters insurance is an added layer of protection that specifically protects your property from damage and your finances from legal liability if something happens to a guest you have at your rental home. Companies such as Allstate list the numerous protections that renters insurance offers, despite typically having a very low monthly premium. The reason that renters insurance premiums are generally so low is due to the relatively small number of instances in which claims are made, coupled with the relatively low value of the property covered.
In comparison to homeowners insurance, renters insurance does not cover the building itself. Instead, renters insurance is limited to the select items that the renter wants to insure, including their personal possessions.
A 2018 study from Statista, as reported by Policy Advice, revealed that there were 7.2 million reported property theft crimes in 2018, but also that only about a third of these crimes are reported, meaning there may be over 20 million instances each year. Regardless of the severity of the theft, renters insurance can also protect your belongings in this type of situation and provide you with replacements or reimbursements as appropriate.
Renters insurance protects against legal liability by covering the costs for counsel and potential damages from court proceedings if a visitor or passerby is injured in your rental as well. Depending on your policy, this protection may even cover that person’s medical expenses on an as-needed basis, potentially absolving you from financial liability.
As an added benefit, your renters insurance can also reimburse you for housing expenses if your rental unit is unfit to inhabit for any reason, such as due to a fire, flood, or other crisis. These crises are unpredictable, so spending a few dollars on a policy that can give you and your family this peace of mind is something to consider.
Essentially, renters insurance covers that sweet spot between things you own that are already insured (such as your car), and the things that aren’t your responsibility (such as the apartment itself and its appliances). Consider what you already have in your apartment and what it means to you. If you believe that those things deserve protection, then you may want to invest the $18 per month average premium that it typically takes to insure them.
Resource Links
“What Renters Insurance Covers” via Allstate
“28 Eye-Opening Property Crime Statistics for 2023” via PolicyAdvice
“The Decade in Housing Trends: High-End Apartments and Thriving Construction” via RentCafe