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 Renters Insurance Will Do for You
"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.

Related Articles
  1. Investing Basics

    Top 10 Features Of A Profitable Rental Property

    Owning rental property is a tough business. Here are 10 things you should consider before investing in an income property.
  2. Retirement

    Real Estate Rents Can Fund Your Retirement

    Rental properties can provide a steady source of income in retirement, but it’s not an effortless investment.
  3. Real Estate

    Best 3 Mortgage Calculator Websites without PMI

    Discover the three best mortgage calculator websites online that do not require you to factor private mortgage insurance (PMI) into your payments.
  4. Insurance

    How Much Homeowners Insurance Should You Carry?

    This breakdown of coverage into its component parts will provide the answer.
  5. Wealth Management

    Using Insurance in a Business Succession Plan

    How to use life and disability insurance to help fund a business succession or buyout plan.
  6. Real Estate

    Best 3 Mortgage Calculator Websites with PMI

    Learn more about all of the factors behind PMI, and discover the three best websites that provide a mortgage calculator that includes PMI.
  7. Home & Auto

    5 Tips on Last-Minute Home Winterization

    To ensure your home is in the best shape to survive the chilly weather ahead, here are five, last-minute tips to help winterize your home.
  8. Mutual Funds & ETFs

    KIE: SPDR S&P Insurance ETF

    Learn about the SPDR S&P Insurance exchange-traded fund, which follows the S&P Insurance Select Industry Index by investing in equities of U.S. insurers.
  9. Taxes

    Don't Miss These Tax Deductions

    Knowing the tax deductions you're entitled to can make or break your bank account. Do you know about all these insurance-related deductions?
  10. Entrepreneurship

    Creating a Risk Management Plan for Your Small Business

    Learn how a complete risk management plan can minimize or eliminate your financial exposure through insurance and prevention solutions.
RELATED FAQS
  1. Does renters insurance cover personal injuries?

    Renters insurance provides two main forms of coverage – liability and contents insurance – and they are offered together ... Read Full Answer >>
  2. Do FHA loans have private mortgage insurance (PMI)?

    he When you make a down payment from 3 to 20% of the value of your home and take out a Federal Housing Administration (FHA) ... Read Full Answer >>
  3. Does renters insurance cover water damage?

    An all-perils renters insurance policy does cover water damage, less the deductible, to personal property if the damage is ... Read Full Answer >>
  4. Does renters insurance cover storage units?

    An all-perils renters insurance policy provides coverage for the contents of storage units. Most policies limit the amount ... Read Full Answer >>
  5. Does renters insurance cover flooding?

    An all-perils renters insurance policy does not cover damage from a flood. Consumers sometimes confuse a pipe bursting with ... Read Full Answer >>
  6. Does renters insurance cover mold?

    An all-perils renters insurance policy typically provides a low set amount of coverage for damage caused by mold as long ... Read Full Answer >>
Trading Center