Renters insurance is often misunderstood or miscategorized. Do not mistakenly assume that, since you don't have expensive stuff, you needn't spend the money on renters insurance. Consider the following scenarios as proof that you simply cannot afford to go without it. (For more information about renters insurance, read Insurance 101 For Renters.)
TUTORIAL: Intro To Insurance
Scenarios to Consider
- You have your annual big game party with your closest personal friends. As one is leaving late Sunday evening, he trips and fractures his ankle. Fortunately, he has health insurance, but between his co-pay, X-rays, MRI and medication, he must pay the hospital $650 out of his pocket.
- The plumbing bursts in the apartment immediately above yours while you're at work. You return home and find your laptop, flat screen HDTV, home theater system and favorite couch are toast. Replacing these critical items will cost you at least $3,500.
- You run to the convenience store to pick up some milk and bread. Your softball equipment bag and smartphone are in your car. You lock it and run into the store. Returning, you notice your passenger window is blown out and your favorite $300 titanium bat, $250 glove and $400 smartphone are gone.
- You return from the emergency room with your fractured friend from the big game party four hours later. You then realize your new $900 laptop, $200 mp3 player and your $400 state-of-the-art smartphone have been stolen.
- You're cooking in your kitchen when your smoke detector announces a problem. You run from your apartment. Upon returning a few minutes later, you notice your favorite baseball team dishtowel is aflame. You quickly extinguish the small fire, but the scorches on your walls and cabinets and the loss of some of your favorite utensils will cost you substantial bucks to repair and replace.
"What is renters insurance?" is a fair question. A better question might be, "Why should I have renters insurance?" First, re-read the common occurrences noted herein. Renters insurance would have covered all of these losses, keeping accidents and annoyances from becoming bank account and budget killers. Remember, however well-insured, your landlord's insurance protects his or her building and his or her stuff. Landlords do not ever cover your stuff. Only you can protect yourself.
It doesn't matter how challenged your budget is; renters insurance is quite inexpensive. For around $20 to $25 per month, you can protect your personal property and get reasonable liability insurance that pays some medical bills for your clumsier friends and visitors. Should an injured guest sue you, liability coverage will even help you pay your legal costs to defend the suit. (To learn more, check out Understanding Your Insurance Contract.)
The Bottom Line
Your stuff is probably worth more than you think it is. According to the USAA insurance company, the average renter's stuff is worth around $20,000. Unless you have this money hanging around doing nothing, protecting it for around $25 per month is a wonderful investment. As you can see, it's also one you really can't afford to skip. Protect your stuff and assets at low cost. You'll sleep better knowing that your possessions are protected.