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Do I Really Need Renters Insurance?

By September 7, 2022No Comments

Could you afford to replace your entire wardrobe if your apartment caught fire? What about your phone, your laptop and all your furniture? If the answer is no, you probably need renters insurance.

Renters insurance can’t stop awful things from occurring, but it can make life a little easier if and when they do occur.

But 56% of renters who responded to a NerdWallet survey said they don’t currently have renters insurance. Of those, 20% said they haven’t bought it because it’s too expensive, while 16% “haven’t gotten around to it.”

If you’re worried about the expense, renters insurance may cost less than you expect — in fact, some tenants could pay next to nothing. Find out why you may want renters insurance and how affordable it can be.

1. Your landlord’s insurance won’t cover you

Some landlords require their tenants to have renters insurance, but if yours doesn’t, it’s not because they’ve got you covered. In NerdWallet’s survey, 13% of respondents without renters insurance said they didn’t buy it because their landlord’s policy covers their residence. Unfortunately, this is often a misconception.

Landlord insurance covers the structure of the building but not tenants’ personal belongings. If your TV is stolen or your dishes are lost in a kitchen fire, your landlord’s insurance won’t pay to replace them — but a renters policy typically will.

A landlord’s policy is also unlikely to help if you accidentally damage a neighboring apartment. A standard renters insurance policy includes liability coverage starting at $100,000, which can pay damages and legal expenses if you’re sued for accidentally injuring someone else or damaging their property.

2. You probably own more than you think

One reason why people avoid renter’s insurance is the thought, ‘I don’t have anything valuable worth protecting,’ But you might be surprised.

You should consider opening each drawer and closet in your home to take an inventory of your belongings. Once you start tallying up the value of each item — electronics, jackets, shoes and so forth — you’ll probably find that it would cost a lot more than you expected to replace everything.


3. Renters insurance can pay for housing after a disaster

Most policies provide what’s called a ‘loss of use’ or ‘additional living expense’ benefit, which pays you if you are forced out of your apartment by a major claim — usually fire or extensive water damage — and you have to stay in a hotel.

4. It can protect your finances

Maybe you’re saving for a down payment on a house, or you’ve worked hard to get out of debt and build an emergency fund. The last thing you need is a lawsuit wiping out everything you have.

Let’s say you go golfing … and you hit someone in the head and they turn around and sue you.. If a court deems you responsible, your renters liability insurance will typically cover costs up to the limit you’ve purchased, even if the incident takes place away from home.

This coverage can also come in handy if your dog bites someone at the park, your child breaks a valuable heirloom at a friend’s house or a guest slips and falls inside your apartment.

5. It covers belongings away from home

Many renters policies provide some coverage for your stuff even when it’s not at home. If your laptop was swiped at the neighborhood cafe, or your phone stolen on the subway, your policy could cover you. (Keep in mind that it would make sense to file a claim only if the lost item were worth more than your deductible.)

6. The cost may be less than you expect

One common reason to avoid renters insurance is the cost. 

The average cost of renters insurance is $200 a year, or about $16 a month, according to NerdWallet’s rate analysis. But if you have a car, you could pay less by bundling your renters policy with your auto insurance, thanks to multipolicy discounts offered by many carriers.

For example, a 5% bundling discount on a $3,000 auto policy would be $150, which would nearly pay for the average renters policy premium.

You may also be eligible for discounts if your apartment has smoke detectors, burglar alarms or other safety and security devices.

If the worst happens, you’ll likely be glad you paid for the coverage. In NerdWallet’s survey, 77% of renters whose landlords required them to buy renters insurance said they would likely buy a policy even if they moved to a different building where it wasn’t required.

Renters insurance is the best defense against things in life you have no control over.