As a Red Cross responder, I have met many people who are recovering from house fires. Most of these people are renters and most don’t have insurance. Dealing with a fire or other disaster is an overwhelming, frustrating and stressful experience, but having insurance can bring much-needed relief. According to the Insurance Information Institute, 95% of homeowners have insurance, however only 40% of renters have insurance. Why do YOU need it?
What is it? Renter’s insurance is similar to homeowner’s insurance in that it covers losses from fire, flood from pipes/sewer backups, or theft. The difference is that homeowner’s insurance is a requirement of a mortgage, and most leases do not require renter’s insurance. However, this is changing. I have seen some of the larger apartment complexes require proof of renter’s insurance before a lease is signed. But, beware of any landlords offering you a renter’s insurance policy as it often provides more coverage for them and little to none for you. Always get your own policy.
Also note that standard homeowner’s and renter’s insurance policies do not cover naturally occurring floods, however you can purchase additional policies if your home is in a flood prone area.
Why do I need it? Most people think they don’t own anything worth insuring, however if you lose everything in a fire, the cost to replace it all can be substantial. Renter’s insurance can cover the costs to replace your clothes, phone, computer, tv and other household items. It can also cover the costs for you to live elsewhere while your place is being repaired. A renter’s policy may also cover any legal or medical fees you may incur.
How much does it cost? The average renters insurance premium is $187/year or $16/month in the United States and $169/year or $14/month in Colorado. For less than the cost of a pizza, you’ll be covered. In addition, you need to consider the deductible amount, which is how much you have to pay before the insurance kicks in. Most deductibles are typically in the range of $500 to $1,000.
Where do I get it? Most insurance companies offer renter’s insurance. Start with the company that insures your car so all your policies can be grouped together. You may even get some discounts this way. Otherwise, you can go to any of the large companies, such as State Farm, Progressive, Allstate or Geico.
What questions should I ask?
• What is the deductible? What costs count toward the deductible?
• What types of “named perils” (i.e. fire, theft, pipes freezing or flooding, etc.) are covered?
• What type of liability protection (i.e. paying for medical and legal expenses) is included?
• How much of my personal property is covered?
• Does the policy cover hotel or temporary housing while my place is repaired?
• Are discounts provided for security systems? Fire sprinkler systems? Smoke alarms?