Renting a place rather than buying can make good financial sense for many reasons. But what if a fire damages your apartment, or a leaky roof saturates your furniture? Who would pay for your damaged belongings? If you think it’s your landlord, think again.
A 2016 survey indicated that while 95 percent of homeowners carry homeowners insurance, only 41 percent of renters carry renters insurance. This could be a big financial mistake. Here are four reasons renters insurance is a good idea for most people.
Renters insurance covers your belongings
If you would have a hard time replacing your personal belongings after a loss, you need renters insurance. Your landlord’s insurance policy only covers the dwelling itself. He or she is not responsible for your belongings, so if there’s a fire or flood and your things are damaged or destroyed, you’re out of luck—and out of pocket. Similarly, if your apartment or house is broken into and your belongings are stolen, you’re also out of luck. Renters insurance covers your personal property, including furniture, clothing, and appliances up to your policy limits—usually $10,000, but you can raise your limits for a nominal amount—check with your Lakewood Financial agent for details.
To make sure your policy limits are adequate to replace your belongings, create a home inventory and add up the cost of replacing your major items, then double it. We recommend that you carry replacement cost rather than actual cash value. (Replacement Cost: what it would cost to replace your item with a comparable brand new item. Actual Cash Value: the value of your item, less depreciation.)
Renters insurance protects your liability
What if one of your friends trips and falls and breaks her arm? Or maybe your friend’s iPhone is stolen while he’s at your house for a party? Renters insurance has you covered. Most renters insurance policies come with $100,000 liability coverage. You may want to discuss with your Lakewood Financial agent whether this is enough. Most of the time, it only costs a little more to raise your limits.
Renters insurance is cost effective
Since a renters insurance policy doesn’t cover the structure itself, the actual cost is fairly low. In fact, the average cost of a renters insurance policy is about the same per month as the cost of having a pizza delivered! This is just a fraction of the cost of replacing all your belongings if they’re damaged or stolen, or defending yourself against a lawsuit if someone is injured at your home. Check with your agent about discounts for safety features like a burglar alarm or sprinkler system to further lower your cost.
Renters insurance helps with additional living expenses
If you can’t live in your rental after a covered loss, your policy may help pay reasonable costs of temporary lodging while it is being repaired. Check your policy for financial and duration limits.
Please give us a call at 941-747-4100 if you have any questions about renters insurance, or if you’d like a quote. We’re here to serve you.